On the rocks

Anyone who’s been paying any attention to the news in the UK over the last few days will be aware of the precarious position of Northern Rock, the Newcastle based former building society.

After it was revealed that the Bank of England had stepped in to act as a lender of last resort, many of Northern Rock’s customers quite understandably became concerned about the security of their savings. And so long queues developed at branches, their internet banking site couldn’t deal with the load caused by people logging on to move their money, and it all turned a bit nasty…

For anyone who’s missed it, lives in another country, or is reading this three years later, there’s a run-down of what’s been happening here.

The latest development is that the government has stepped in to guarantee all savings in Northern Rock – the usual protection is limited to around £30,000. Now in one way, that should reassure the people who have been planning to withdraw their savings, but the fact that they’ve found it necessary to do so can only fuel speculation that Northern Rock’s days are numbered.

Now normally, I wouldn’t bother to post about a financial institution that’s got itself into trouble, but this is a bit different. Northern Rock is a very major employer in this area, its charitable foundation does a lot of good work, and it’s a major sponsor of sport and the arts in the region. If, as seems increasingly likely, it’s taken over or broken up, the loss to the North East would be drastic.

Personally, I don’t have any money in Northern Rock, so I’m not going to pontificate about what people should do with their money. This is more of an observation on what’s going on…