You are in > manchester.com  > News > Further Northern Rock withdrawals expected

Finance

Further Northern Rock withdrawals expected

17/09/2007

More savers are set to withdraw their money from beleaguered bank Northern Rock today, despite repeated assurances from the lender that their cash is safe.

Northern Rock branches opened an hour earlier at 08:00 BST and will stay open until the later than usual time of 18:00 BST, in anticipation of further queues of anxious customers looking to reclaim their savings.

Reports suggest that around £2 billion has been withdrawn from the bank since it emerged on Thursday that the company had requested emergency funds from the Bank of England.

Northern Rock's share price subsequently slumped by over 30 per cent on Friday, amid concerns that a run of withdrawals could exacerbate the bank's funding problems.

Customers of the bank have been taking out their funds despite the Financial Services Authority (FSA) insisting that Northern Rock is solvent.

In a statement posted on Northern Rock's website yesterday, the bank's chief executive Adam Applegarth also made a further attempt to persuade savers to remain calm.

"Let me now reassure you. Your money is safe with us and if you want some, or all of it back, then you are perfectly entitled to it," he said.

"However, your savings are secure and there is no need for you to withdraw your money based on our recent announcement, and the widespread media coverage that has ensued," Mr Applegarth stressed.


Meanwhile HSBC and HBOS are among the names being touted as potential white knight suitors to takeover troubled Northern Rock, with reports claiming that a deal with Lloyds TSB has already fallen through as a result of the difficulty banks are having borrowing money in the current financial climate.

The decision by the Bank of England to grant Northern Rock emergency cash comes amid concerns that banks are becoming increasingly reluctant to lend money to one another on the wholesale market, as credit dries up in the wake of ongoing problems in the US housing market.

Share prices across the globe have been fluctuating in recent weeks as a result of rising default levels in the US sub-prime mortgage sector, which makes home-loans available to those on low incomes or with poor credit ratings.

Traders fear that the problems could spread to the wider economy if banks become less willing to lend cash to consumers and businesses as a result of losses they have made due to exposure to bad debts in the sub-prime sector.