Northern Rock customers withdraw £2 Billion

Since Friday, people with accounts with Northern Rock have withdrawn almost £2bn. The firm is also preparing itself for more withdrawals in coming days.
Long queues were the scene outside many Northern Rock branches across the UK as worried shareholders joined extremely long queues to take out their money. Northern Rock almost sold itself to it’s rival Lloyds TSB before going cap-in-hand to the Bank of England (BoE) asking for emergency funds. The deal with Lloyds TSB fell through because of the difficulty of borrowing money in the current financial climate.
The £2bn withdrawn represents the 8% of the £24bn deposits the bank held on Thursday, this is a lot less than what mortgage lenders and officials at the BoE feared. More money is expected to be withdrawn in the coming days, especially from those holding Northern Rock’s postal accounts.
FSA, the City watchdog, has backed comments from the Treasury saying it is confident that the Northern Rock is solvent and that savers could continue to deposit and withdraw funds:

“To be absolutely clear, if we believed Northern Rock was not solvent, we would not have allowed it to remain open for business” - FSA Chairman Callum McCarthy

“ I expect that in a year’s time, Northern Rock will not exist. As a brand it is shot” Justin Urquhart Stewart (analyst)

 The situation turned political today as Cameron blamed the Brown led Labour party for the Banks problems, saying that various taxes and charges brought into place by Brown, when he was head of the exchequer in Blair’s party, have damaged Northern Rock “beyond repair”

Peter Self