Mumbai:
Nervous customers, worried the bank would go under, have pulled out 2 billion
pounds ($4 billion) from UK mortgage lender Northern Rock sending its shares down
as much as 41 per cent. Shares
of Northern Rock, which closed down 35 per cent at 288 pence, have now dropped
around 50 per cent since the company announced it might get an unspecified amount
of funding from the Bank of England. Northern
Rock opened an hour early to meet the demands of customers wanting their cash
who flocked over the weekend either lining up at branches, or via phone
and the internet to withdraw money from the lender. As
of September 13, Northern Rock had 24 billion pounds in deposits. The
news dented the British pound once more and dragged stock markets in the UK and
Europe lower for a second day. The
turmoil in Northern Rock shares fuelled additional speculation about a potential
takeover, with the bank seen as having less and less sway over possible buyers.
Meanwhile, the
Bank of England has reversed its stance on whether it would provide the funding
it''s giving to Northern Rock to a prospective suitor. Talks
with Northern Rock and another UK bank, Lloyds TSB, collapsed last week on concerns
that the central bank''s funding would stop once Northern Rock was purchased, according
to press reports. But
according to a report in The Times (of London) newspaper, the Bank of England
has now reversed course, and will extend such funding. Besides
Lloyds TSB, other possible buyers include Citigroup, Credit Agricole and National
Australia Bank, according to various press reports.
also see : General
reports on Banks & Financial Institutions
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