Northern Rock panic calms
Northern Rock: calm
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Wednesday, 19, Sep 2007 09:23
Government guarantees of Northern Rock savings have calmed customers, following four days of panic.
The bank reported queues outside four of its 76 UK branches yesterday.
Northern Rock call centres also saw a fall in inquiries with a tenth of calls on Tuesday as on Monday - some 3,472 calls were made by 10:30 BST on Tuesday, compared with 36,894 on Monday.
Furthermore eight out of ten callers were aiming to reinvest cash they had previously withdrawn.
The number of customers accessing internet accounts halved and Northern Rock reports most people were able to log on with their first attempt.
In the home of Northern Rock, the paper the Newcastle Journal has called on locals to invest £2,000 each in the bank. Former England and Newcastle manager Sir Bobby Robson has opened an account, in recognition for the company's support for local sport and charities.
Since Friday, when Northern Rock asked the Bank of England for help, a total of £3 billion has been withdrawn.
Uncertainty now surrounds the future of Northern Rock. With confidence in the bank and its business model low, it could be a target for a takeover bid, especially given the substantial fall in the firm's share price.
Reports over the weekend suggested Lloyds TSB had entered talks for a last minute takeover before the crisis, but any deal was blocked by the Financial Services Authority (FSA).
The fall in share price has led many consumers to buy Northern Rock shares, in a bid to cash in on any future rises.
City AM reports broker Hoodless Brennan had a 300 per cent increase in new accounts and 38 per cent of all individuals trading in Northern Rock. Eighty-five per cent of people trading in Northern Rock were buying.
Northern Rock is now offering a refund on any penalty fees for early withdrawal of money if customers reinvest the funds into the same type of account by October 5th 2007.