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ARGOMENTO: UK Bank Panic

UK Bank Panic 8 Anni, 8 Mesi fa #1423

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Police called to break-up Northern Rock panic queues as customers withdraw millions

Police officers have been called to break-up panicked crowds gathering to withdraw their savings from Northern Rock.

While the Government and the City said there was no need to panic, savers ignored the reassurances, withdrawing close to 1billion pounds yesterday.

Staff at Glasgow city centre branch called police to deal with boisterous customers. Two plain clothes officers arrived just before the banks official Saturday closing time of midday.

Re:UK Bank Panic 8 Anni, 8 Mesi fa #1424

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A House of Cards

The following picture of people lining up to withdraw their money from a bank was not taken in the 1930's.
It's from Thursday in Preston, England.






Northern Rock is probably insolvent. The Bank of England in effect has said as much by announcing a bailout of this bank. Their bailout is an egregious example of how governments intervene to disrupt the market process, particularly when it comes to banks.

Northern Rock is just the latest victim as the global credit crunch widens its reach, and it is indeed widening.

The most vulnerable are the first to fail. Northern Rock like countless other banks before it - and no doubt many other banks not yet in Northern Rock's dire position - caught the fatal disease that has relentlessly sunk banks throughout the ages. These are the banks that 'lend long and borrow short', and nearly all of them do. In other words, banks that have loans with long maturities funded by short-term deposits are learning how fickle people can be with their money.

Re:UK Bank Panic 8 Anni, 8 Mesi fa #1425

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Police help to disperse Northern Rock queues

The bank's website had crashed but is currently running with a message asking users to be patient and claiming that transactions will be dealt with.

Long lines formed at 72 branches across the country even before counters opened this morning.

Police were called to deal with "boisterous customers" after a Glasgow City Centre branch closed at midday.

A spokesman for Strathclyde Police said: "A call came in asking for assistance as some of the customers were getting a bit boisterous.

Re:UK Bank Panic 8 Anni, 8 Mesi fa #1426

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Britain sees a bank run

Despite Northern Rock's assurances that there was no need for customers to panic, queues continued to build steadily at the London branches visited by the Daily Telegraph today.

For 65-year old Tony Looch, with savings of 135,000 pounds,the lender's calming words were not enough.

"I'm prepared to wait as long as it takes. I'm taking the lot out, if they'll let me have it," said Mr Looch, who was queuing outside the bank's Moorgate branch, in the heart of the Square Mile.


Bank of England in dramatic intervention

Friday September 14, 2007
The Guardian


The Bank of England was last night forced to hand emergency funding to one of Britain's biggest mortgage providers - Northern Rock - as it became the first major financial institution in the UK to run into serious trouble as a result of the credit crisis that has caused turmoil in world financial markets.

The Bank's intervention was agreed with its governor, Mervyn King, the chancellor, Alistair Darling, and the Financial Services Authority sources close to the situation said last night. The news is likely to lead to big sell-offs in banking stocks when the stock market opens today.

Re:UK Bank Panic 8 Anni, 8 Mesi fa #1427

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The Bank of England made $8.8 billion emergency loans

Sept. 18 (Bloomberg)


The Bank of England made emergency loans to U.K. banks to bolster the financial system, saying it received ``intelligence'' that demand for money may prolong a surge in overnight borrowing costs.

The central bank said it loaned 4.4 billion pounds ($8.8 billion) of ``exceptional'' funds at its benchmark interest rate of 5.75 percent today in London, and will offer the same amount on Sept. 20 in seven-day debt. The overnight rate banks charge to lend in pounds soared 60 basis points to 6.47 percent yesterday, the most since June.

``Secured overnight money market rates have again been unusually high,'' relative to the benchmark rate, the bank's statement said. ``This, together with intelligence from counterparties, suggests that there may have been a further rise in the demand for reserves.''

The bank is battling to protect the British economy from a surge in borrowing costs and a run on U.K. mortgage lender Northern Rock Plc. Regulatory officials insisted today that the Newcastle, England-based bank is ``solvent,'' after Chancellor of the Exchequer Alistair Darling yesterday pledged to reassure savers that it will guarantee all deposits held there.

`Volatile and Uncertain'

``The bank's core money-market operations objective is to keep that overnight rate close to the benchmark and you have to respond to conditions as they arise,'' said Ross Walker, U.K. economist at Royal Bank of Scotland Group Plc in London. ``I don't think we're out of the woods yet. Things are going to remain fairly volatile and uncertain for some time.''

The cash injection is meant ``to offset the disturbance to conditions in the short-term money markets'' after the central bank extended a rescue credit line to Northern Rock last week, the statement said. Shares in the lender rose 6.6 percent to 301.75 pence as of 11:09 a.m. in London.

``This bank is solvent and it's rightly open for business and depositors have been able to withdraw money and the deposits are safe,'' Hector Sants, chief executive officer of the U.K.'s Financial Services Authority, said in a BBC Radio 4 interview today. ``We've been closely monitoring Northern Rock from the beginning of this crisis.''

Northern Rock, whose roots date back to 1850, is the most vulnerable U.K. bank to the higher rates of the past two months because capital markets account for 73 percent of its funding. The last time the central bank rescued a U.K. lender was after the 1973 collapse of Cedar Holdings, a pioneer of second mortgages.

The central bank said it received bids totaling 25.5 billion pounds for today's money-market operation and it allocated 17.3 percent of that amount. In a regular three-month financing operation, the bank said it awarded 1.5 billion pounds in loans after receiving bids for more than three times that amount.

``Conditions have deteriorated and they are concerned,'' said Jeavon Lolay, an economist at Lloyds TSB Group Plc in London. ``What they're doing is great. It shows they will respond if there's a need for them to respond.''

The pound slipped about 0.1 percent to $1.9929 after the U.K. inflation rate fell to 1.8 percent in August, the lowest since March 2006.

Re:UK Bank Panic 8 Anni, 8 Mesi fa #1428

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Bank of England to Lend 10 Billion Pounds in Emergency Auction

Bloomberg
September 19, 2007


The Bank of England abandoned its opposition to emergency three-month money auctions and loosened lending standards, a week after Governor Mervyn King said such steps would encourage ``risky behavior.''

``This measure is being taken to alleviate the strains in longer-maturity money markets,'' the bank said in a statement today. The Bank of England said it will accept ``mortgage collateral'' at the auction of 10 billion pounds ($20 billion) in loans next week. It will have a penalty rate of 6.75 percent.

King, who will testify to U.K. lawmakers tomorrow, is facing criticism for his handling of the credit-market slump just nine months before his term expires. While the governor refused to relax the bank's system for helping troubled financial institutions on Sept. 12, the Bank of England was forced two days later to bail out mortgage lender Northern Rock Plc.

``It's a significant departure,'' said Ross Walker, an economist at Royal Bank of Scotland Group Plc in London. King ``will have to demonstrate that the risks to the wider financial system were such that they justified these steps'' when he briefs lawmakers.

The Bank of England said three further offerings will be made at ``weekly intervals.'' The size of future auctions will be decided in ``due course.''

The three-month London interbank offered rate in pounds, or Libor, dropped 0.2 percentage point to 6.55 percent today in London. The overnight rate declined 0.25 percentage point to 5.89 percent.

The gap between the three-month Libor rate, which reached a high this year of 6.9 percent on Sept. 11, and the bank's benchmark had reached the widest in at least two decades.
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