Panic

The Daily Mail is reporting what looks very much like a full-scale bank panic in Britain. So far, only the Northern Rock bank is being hit - but it is being hit very, very hard indeed. Long lines of customers are formed up outside branch offices and the bank's website has crashed under the load of customers trying to get at their money.

A full-scale banking crisis loomed today as customers panicked and withdrew their savings from Northern Rock.

While the Government and the City said there was no need to panic, savers ignored the reassurances and formed queues outside branches after the bank asked the Government for an emergency loan.

One woman, leaving Northern Rock's branch in London's Harrow, said: "I have withdrawn all my money. I got here at about 8.40am and was about 12th in the queue.

"It took me well over an hour to be served and by the time I got outside there must have been at least 50 people queuing into the street.

"I know everyone has been urged not to panic but I just felt safer moving the money somewhere else rather than worrying about Northern Rock's financial position over the next few days."

By 11.30am the firm's website crashed as tens of thousands of customers attempted to log on to withdraw their savings.

The BBC is reporting that other bank's share prices are tumbling (Northern Rock is plummeting) but that the government is insisting that Northern Rock will not collapse.

Shares in one of the UK's largest mortgage lenders, Northern Rock, have fallen 32% after it had to ask the Bank of England for emergency funding.

But experts and officials insist that Northern Rock, which has £113bn in assets, is not in danger of going bust.

The bank has struggled to raise money to finance its lending ever since money markets seized up over the summer.

Other bank shares fell, with Bradford & Bingley, Alliance & Leicester and HBOS down nearly 8%, 7% and 4% respectively.

Any bank run can trigger a wider panic, if history is any indicator. But the central banks try very hard not to let that happen if there is any way to stop it. It will be an interesting (read unpleasant) couple of days for bank officials in Britain until this sorts itself out.

Other Links to this Post

1. Blue Crab Boulevard » Northern Rocked — Friday, 14 September , 2007 @ 6:42 pm