It is five years today since the run on Northern Rock which led to the credit crunch and caused the UK’s fifth largest mortgage lender to request a government bailout.
The very next day the terms of the taxpayer funded bailout were announced and thousands of customers queued at Northern Rock branches to withdraw their money.
Northern Rock needed a bailout after it was unable to secure its nornal borrowing from global banks that it needed to survive.
The bailout and subsequents taxpayer help for both Lloyds and the Royal Bank of Scotland helped change the financial landscape for a generation.
In the five years since, savings rates have crashed, but so have mortgage rates. However, it has also become more difficult to get a mortgage.
Average savings rates have fallen by 3.3 per cent in the last five years as the Bank of England pursues a quantitative easing and low interest rate policy to protect the property market.
Five years later, the man who authorised the taxpayer bailout, the then Chancellor, Alistair Darling, says that lessons must be learnt to avoid a repeat.
Mr Darling said: "The problem was that people assumed that if you were making money then everything must be OK.
"Perhaps companies should ask themselves, if you are making an awful lot of money, why are you making all of this money?
"Is it well founded or is it being built on a completely false basis?
"If you look at the position that Northern Rock was in, it went from being a pretty small provincial building society, largely based in the North East, to one of the major mortgage providers for the whole country and they did it very, very quickly.
"They just carried on as if nothing was going to go wrong," he added.
Much of Northern Rock's funding came from packaging up high risk mortgages into a package and selling on the debt to investors as well as borrowing from wholesale markets.
However, as doubts about the security of the bank increased these sources of funding ended.
The crisis happened as it became apparent that many of these “sub-prime” mortgages were linked to borrowers with poor credit histories in the US who had begun to default on their loans and were unlikely to ever be able to repay their debts.
The crisis escalated to Northern Rock, forcing the then Labour Chancellor, Alistair Darling to step in and save the bank.
During the next four months the government looked for potential investors who they could sell the bank too, but by February 2008 no suitable offers had been received that would protect taxpayers’ interests, so the bank was nationalised.
The bank was managed by a government appointed team until a commercial sale could be finalised.
It was not until November 2011, that the new coalition government agreed a sale to Virgin bank for £747 million.
In July this year, the government received a further £538 million linked to the value of Northern Rock’s loan book, providing additional funds back to the taxpayer.
Following the collapse and bailout of Northern Rock, the government had to make subsequent bail-outs of Lloyds Banking Group and the Royal Bank of Scotland of £21 billion and £45 billion respectively.
Following the banking crisis, new scandals emerged such as the mis-selling of PPI and the manipulation of the interbank Libor rate, which has left the banking sector’s reputation at an all-time low.
Michael Ossei, personal finance expert at uSwitch.com, says: "The credit crunch has left a lasting crack in our banking sector that the traditional high street banks have done little or nothing to fill. Instead of rebuilding consumer trust and confidence they have lurched through a series of high profile scandals and mis-selling cases.
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