Northern Rock Shares Collapse
14 September 2007, 05:42 PM
#92
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A BIG fat chance to make some serious money here ....... these shares cannot fail but increase by at least £1 each in the short term, £2 each in the medium term.
I am personally about to stag them
I am personally about to stag them
14 September 2007, 07:43 PM
#93
Buy not bye
I've put in an order to buy 10ks worth at Monday opening. I reckon to make 10% on it in a week and possibly more. Couldn't do it today, as I didn't have my internet banking details with me in the office (which is a bank). 
The reaction we are seeing is ridiculous given their balance sheet. They lend more in the interbank market than they borrow, have 8bn of bonds to pledge as collateral and a fairly healthy loan book (not that big in BTL either).
I reckon someone is going to try and take them over at this price level and give me a big fat profit.
If I'm wrong, please feel free to gloat at a later stage.
The reaction we are seeing is ridiculous given their balance sheet. They lend more in the interbank market than they borrow, have 8bn of bonds to pledge as collateral and a fairly healthy loan book (not that big in BTL either).
I reckon someone is going to try and take them over at this price level and give me a big fat profit.
If I'm wrong, please feel free to gloat at a later stage.
14 September 2007, 08:04 PM
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Any online way to buy Northern Rock shares.
The only thing is there are so many banks offering their services why go to one with a damaged reputation. Surely this will affect them long term for years to come.
The only thing is there are so many banks offering their services why go to one with a damaged reputation. Surely this will affect them long term for years to come.
14 September 2007, 08:09 PM
#95
Ahh f*ck em, me and another lad on here went for a loan from them and got not back despite being good for it, small amount, good rate, good credit rating and didnt want to know.
14 September 2007, 08:15 PM
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I wont be gambling on these - learnt from past mistakes...
I wouldnt be surprised to see their shares up on Monday, but expect them to be lower than they are now at the end of the week. If you look at the 'previous month' for Barclays etc there are big spikes where people have piled in after sharp falls, but overall they've still kept falling.
I wouldnt be surprised to see their shares up on Monday, but expect them to be lower than they are now at the end of the week. If you look at the 'previous month' for Barclays etc there are big spikes where people have piled in after sharp falls, but overall they've still kept falling.
14 September 2007, 10:47 PM
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If I were one of the high end executives at Northern Rock I'd be beating the **** into my PR and BoE for blabbing to the press.
If only they had kept there mouth shut about the transfer of funds from BoE
Tbh I blame the press for the histeria. FFS there only changing source of funder to an even better one!!!
If only they had kept there mouth shut about the transfer of funds from BoE
Tbh I blame the press for the histeria. FFS there only changing source of funder to an even better one!!!
15 September 2007, 02:34 AM
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Northern Rock is essentially a sound business. But as they can only fund about 30% of the mortgages from deposits by savers, they have to get the remaining 70% from the money markets. With inter-bank lending tightening up markedly because banks here don't know to what extent their financial customer are exposed to the "toxic waste", they have a liquidity problem. The Bank of England is acting as lender of last resort, they are not giving them the money, simply loaning it to them on commercial terms at (1% over bank base rate I believe).
Other banks and building societies can fund a larger percentage of mortgages from savers' deposits, from a news item the Alliance & Leicester can fund 50% of mortgages from savers deposits, the Nationwide Building Society 70%, etc. They are all experiencing a tightening of inter-bank lending, but those who depend on it more (i.e. Northern Rock) experience greater pain.
FYI did you know Barclays Bank had to borrow £1.6bn from the Bank of England about 2 weeks ago? They blamed a technical problem for not securing the money from other institutions before the end of the working day, but I think it's more than co-incidence it has happened at this time. Barclays Capital has reportedly been involved a lot with exactly the types of financial products which contains this "toxic waste", collaterised debt obligations and the like.
There will be no problem if people just relax and leave their savings where they are. But if they all try to take their savings out then they may precipitate a crisis and a full scale run on the bank will ensue. Don't go withdrawing all your money from these institutions, you will cause what you fear most.
Other banks and building societies can fund a larger percentage of mortgages from savers' deposits, from a news item the Alliance & Leicester can fund 50% of mortgages from savers deposits, the Nationwide Building Society 70%, etc. They are all experiencing a tightening of inter-bank lending, but those who depend on it more (i.e. Northern Rock) experience greater pain.
FYI did you know Barclays Bank had to borrow £1.6bn from the Bank of England about 2 weeks ago? They blamed a technical problem for not securing the money from other institutions before the end of the working day, but I think it's more than co-incidence it has happened at this time. Barclays Capital has reportedly been involved a lot with exactly the types of financial products which contains this "toxic waste", collaterised debt obligations and the like.
There will be no problem if people just relax and leave their savings where they are. But if they all try to take their savings out then they may precipitate a crisis and a full scale run on the bank will ensue. Don't go withdrawing all your money from these institutions, you will cause what you fear most.
Last edited by Brit_in_Japan; 15 September 2007 at 02:37 AM.
15 September 2007, 08:16 AM
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There will be no problem if people just relax and leave their savings where they are. But if they all try to take their savings out then they may precipitate a crisis and a full scale run on the bank will ensue. Don't go withdrawing all your money from these institutions, you will cause what you fear most.
Last edited by Bravo2zero_sps; 15 September 2007 at 08:20 AM.
15 September 2007, 09:04 AM
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Northern Rock is essentially a sound business. But as they can only fund about 30% of the mortgages from deposits by savers, they have to get the remaining 70% from the money markets. With inter-bank lending tightening up markedly because banks here don't know to what extent their financial customer are exposed to the "toxic waste", they have a liquidity problem. The Bank of England is acting as lender of last resort, they are not giving them the money, simply loaning it to them on commercial terms at (1% over bank base rate I believe).
Other banks and building societies can fund a larger percentage of mortgages from savers' deposits, from a news item the Alliance & Leicester can fund 50% of mortgages from savers deposits, the Nationwide Building Society 70%, etc. They are all experiencing a tightening of inter-bank lending, but those who depend on it more (i.e. Northern Rock) experience greater pain.
FYI did you know Barclays Bank had to borrow £1.6bn from the Bank of England about 2 weeks ago? They blamed a technical problem for not securing the money from other institutions before the end of the working day, but I think it's more than co-incidence it has happened at this time. Barclays Capital has reportedly been involved a lot with exactly the types of financial products which contains this "toxic waste", collaterised debt obligations and the like.
There will be no problem if people just relax and leave their savings where they are. But if they all try to take their savings out then they may precipitate a crisis and a full scale run on the bank will ensue. Don't go withdrawing all your money from these institutions, you will cause what you fear most.
Other banks and building societies can fund a larger percentage of mortgages from savers' deposits, from a news item the Alliance & Leicester can fund 50% of mortgages from savers deposits, the Nationwide Building Society 70%, etc. They are all experiencing a tightening of inter-bank lending, but those who depend on it more (i.e. Northern Rock) experience greater pain.
FYI did you know Barclays Bank had to borrow £1.6bn from the Bank of England about 2 weeks ago? They blamed a technical problem for not securing the money from other institutions before the end of the working day, but I think it's more than co-incidence it has happened at this time. Barclays Capital has reportedly been involved a lot with exactly the types of financial products which contains this "toxic waste", collaterised debt obligations and the like.
There will be no problem if people just relax and leave their savings where they are. But if they all try to take their savings out then they may precipitate a crisis and a full scale run on the bank will ensue. Don't go withdrawing all your money from these institutions, you will cause what you fear most.
Thanks for that expalnation. If there is no bank that has more savers deposits than mortgage lending where does the extra money come from then. Say all the banks added together have 200bn in savers deposits, yet have 400bn in mortgages to pay out, where does the shortfall come from.
My second question is where does the bank of england get its money from,as far as i havent seen any branches for people to deposit money.
15 September 2007, 09:22 AM
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Regarding people withdrawing large sums of money,would you be able to. Surely most people who have more than 40-50k in cash will have it mostly in one form of internet banking, ie ISA or higher interest account. According to reports you cannot access NR on the internet and you cannot get it from your branch. That is the only thing that concerns me over this whole thing. Like people have said, there's some unnessacery panic, but if there was a bank collapse they just turn off the website and you're knackered.
Last edited by paulr; 15 September 2007 at 09:23 AM. Reason: edit
15 September 2007, 09:40 AM
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Thanks for that expalnation. If there is no bank that has more savers deposits than mortgage lending where does the extra money come from then. Say all the banks added together have 200bn in savers deposits, yet have 400bn in mortgages to pay out, where does the shortfall come from.
My second question is where does the bank of england get its money from,as far as i havent seen any branches for people to deposit money.
My second question is where does the bank of england get its money from,as far as i havent seen any branches for people to deposit money.
Nowadays they all run with liquidity ratios >1, in other words they loan out more money than they have as deposits, funded by other types of lending, e.g. government bonds or as we've been hearing these collateralised debt and loan obligations, which are far less secure.
If all the savers with any bank, and I mean ANY bank, all went to withdraw their money at the same time, that bank would collapse. Barclays, HBOS, HSBC, Nationwide... anyone. Of course the bigger the bank the more liquidity they should have and so unless people were withdrawing tens of billions a day, they'll meet their obligations. The whole financial system is based on our belief that it is secure, but scare enough people and you could bring down virtually any bank.
The government gets money from taxes of course, but far more importantly it issues government bonds. These bonds are bought because they are perceived as the most secure form of investment (hence why they are called gilt-edged) and so are bought by investment banks, pension funds etc. The government has a rolling programme of bond issue, so it covers the costs of repaying bonds by issuing more bonds.
15 September 2007, 11:01 AM
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Aside from Zimbabwe National Bank, of course.
They just phone up the printers.
Leading me to a genuine question. When, if at all, does BoE actually introduce new cash into the system i.e. get some new notes printed that aren't just replacing old recalled notes? dl
PS. I like the Google ad at the bottom - "Northern Rock Loans for any purpose. Bad credit OK"
They just phone up the printers.
Leading me to a genuine question. When, if at all, does BoE actually introduce new cash into the system i.e. get some new notes printed that aren't just replacing old recalled notes? dl
PS. I like the Google ad at the bottom - "Northern Rock Loans for any purpose. Bad credit OK"
Last edited by David Lock; 15 September 2007 at 11:08 AM.
15 September 2007, 12:41 PM
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Banks operate with a certain liquidity-asset ratio. What is means is that at any time if they have £X money deposited with them in hard cash, then can afford to lend out Y * X in loans. In days gone by the liquidity ratio would be say 0.9, i.e. 90% of the deposits would be loaned out to earn money. So long as they have enough liquidity to return any customer's savings deposits when asked, there is no problem. They want to keep liquid cash to a minimum (commensurate with having sufficient liquidity to meet any withdrawals) so that they can loan out as much as they can and make bigger profits on the interest they charge.
Nowadays they all run with liquidity ratios >1, in other words they loan out more money than they have as deposits, funded by other types of lending, e.g. government bonds or as we've been hearing these collateralised debt and loan obligations, which are far less secure.
If all the savers with any bank, and I mean ANY bank, all went to withdraw their money at the same time, that bank would collapse. Barclays, HBOS, HSBC, Nationwide... anyone. Of course the bigger the bank the more liquidity they should have and so unless people were withdrawing tens of billions a day, they'll meet their obligations. The whole financial system is based on our belief that it is secure, but scare enough people and you could bring down virtually any bank.
The government gets money from taxes of course, but far more importantly it issues government bonds. These bonds are bought because they are perceived as the most secure form of investment (hence why they are called gilt-edged) and so are bought by investment banks, pension funds etc. The government has a rolling programme of bond issue, so it covers the costs of repaying bonds by issuing more bonds.
Nowadays they all run with liquidity ratios >1, in other words they loan out more money than they have as deposits, funded by other types of lending, e.g. government bonds or as we've been hearing these collateralised debt and loan obligations, which are far less secure.
If all the savers with any bank, and I mean ANY bank, all went to withdraw their money at the same time, that bank would collapse. Barclays, HBOS, HSBC, Nationwide... anyone. Of course the bigger the bank the more liquidity they should have and so unless people were withdrawing tens of billions a day, they'll meet their obligations. The whole financial system is based on our belief that it is secure, but scare enough people and you could bring down virtually any bank.
The government gets money from taxes of course, but far more importantly it issues government bonds. These bonds are bought because they are perceived as the most secure form of investment (hence why they are called gilt-edged) and so are bought by investment banks, pension funds etc. The government has a rolling programme of bond issue, so it covers the costs of repaying bonds by issuing more bonds.
Thanks.
Any more information i'd be interested to read.
15 September 2007, 06:17 PM
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Did anyone see the BBC news this morning? Hundreds of old crumblies waiting round the block to get their money out, even when the news reporter told them there's nothing to worry about. Nothing like a bit of mass hysteria; we love it in this country don't we? lol
15 September 2007, 06:22 PM
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Yes, but lets be really honest here. Who really has faith in our government? Remember all the lies they have spun? Iraq WMDs, pensions, etc etc.
You have a choice, believe what they say, or look after yourself. It may take a few hours queuing, but I do not blame anyone of them. Even though it won't crash
You have a choice, believe what they say, or look after yourself. It may take a few hours queuing, but I do not blame anyone of them. Even though it won't crash
15 September 2007, 06:36 PM
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There was a que of about 60 people outside Northern Rock in Stockport today
I'm tempted to buy some shares at the end of this week depending what happens from now until then!
I'm tempted to buy some shares at the end of this week depending what happens from now until then!
15 September 2007, 07:05 PM
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15 September 2007, 10:14 PM
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I will have dipped in and dipped out by the end of next week - mopping up £1 a share I am guessing??
Easy money! But please don't wait a week 'To See'
or you will miss the boat!
17 September 2007, 10:01 AM
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It's not looking good is it?
I hope I’m wrong but I’ve a very bad feeling - Times Online
I know it's only a what if opinion, but he's not the only one concerned. After all what are NR's assets? Their collateral is the value of the properties for which they have advanced mortgages. What if the value of these properties falls as now seems likely?
Greenspan seems sure that this will happen,
BBC NEWS | Business | Greenspan sees end to house boom
I see that there have been some big falls in the share of other mortgage providers this morning. Anyone care to comment?
Anyone remember 1973? No? I did't think so. There are some parallels.
BBC NEWS | Business | Upheaval triggers monetary memories
Anyway we live in interesting times.
I hope I’m wrong but I’ve a very bad feeling - Times Online
I know it's only a what if opinion, but he's not the only one concerned. After all what are NR's assets? Their collateral is the value of the properties for which they have advanced mortgages. What if the value of these properties falls as now seems likely?
Greenspan seems sure that this will happen,
BBC NEWS | Business | Greenspan sees end to house boom
I see that there have been some big falls in the share of other mortgage providers this morning. Anyone care to comment?
Anyone remember 1973? No? I did't think so. There are some parallels.
BBC NEWS | Business | Upheaval triggers monetary memories
Anyway we live in interesting times.