This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/6997765.stm

The article has changed 29 times. There is an RSS feed of changes available.

Version 11 Version 12
Bank braced for more withdrawals Bank braced for more withdrawals
(11 minutes later)
Bank Northern Rock bank has opened early as anxious customers again look to withdraw money from their accounts.Bank Northern Rock bank has opened early as anxious customers again look to withdraw money from their accounts.
Bank boss Adam Applegarth said people could withdraw money and that it was "business as usual", while Chancellor Alistair Darling urged for calm.Bank boss Adam Applegarth said people could withdraw money and that it was "business as usual", while Chancellor Alistair Darling urged for calm.
About £2bn has been withdrawn since Thursday, when the bank applied to the Bank of England for emergency funds.About £2bn has been withdrawn since Thursday, when the bank applied to the Bank of England for emergency funds.
In Monday morning trading, shares in Northern Rock were down by 29%. Shares in fellow mortgage banks also suffered. In Monday morning trading, shares in Northern Rock were down by 32%. Shares in fellow mortgage banks also suffered.
In early trade in London Northern Rock's shares, which had lost 32% on Friday, fell from 438 pence to 311.5 pence. At one stage during the morning they had been down 31% before a slight recovery. In morning trade in London Northern Rock's shares, which had lost 33% on Friday, fell from 438 pence to 293 pence. Shares in mortgage lenders Alliance & Leicester and Bradford & Bingley were also down, by 14% and 11%.
Shares in mortgage lenders Alliance & Leicester and Bradford & Bingley were also down, by 7% and 8%.
'Bank of England backing''Bank of England backing'
Mr Darling had told the BBC's Radio 4 Today programme that the money of Northern Rock depositors was safe.Mr Darling had told the BBC's Radio 4 Today programme that the money of Northern Rock depositors was safe.
"If people want to get their money out of Northern Rock bank, they can do it. The money is there and it is backed by the Bank of England so they can get it," he said."If people want to get their money out of Northern Rock bank, they can do it. The money is there and it is backed by the Bank of England so they can get it," he said.
Northern Rock branches had opened at 0800 BST on Monday - an hour earlier than usual.Northern Rock branches had opened at 0800 BST on Monday - an hour earlier than usual.
Mr Applegarth apologised to customers who had had to wait in queues to be dealt with by staff, but said that bank branches had been "extremely busy".Mr Applegarth apologised to customers who had had to wait in queues to be dealt with by staff, but said that bank branches had been "extremely busy".
Lindsay Topping, 59, from Cliftonwood in Bristol, who has tens of thousands of pounds in her Northern Rock account, said: "I've got quite a lot of money in there.Lindsay Topping, 59, from Cliftonwood in Bristol, who has tens of thousands of pounds in her Northern Rock account, said: "I've got quite a lot of money in there.
"I'm not sure what I'm going to do with it. I'll wait and see what I'm told. It's impossible not to feel a bit panicked after the coverage we've seen over the last few days.""I'm not sure what I'm going to do with it. I'll wait and see what I'm told. It's impossible not to feel a bit panicked after the coverage we've seen over the last few days."
See what went wrong at Northern RockSee what went wrong at Northern Rock
It is understood Northern Rock was almost sold to rival bank Lloyds TSB.It is understood Northern Rock was almost sold to rival bank Lloyds TSB.
However, the deal fell through because of the difficulty of borrowing money in the current financial climate.However, the deal fell through because of the difficulty of borrowing money in the current financial climate.
The lower the Northern Rock share falls the easier it would be for a rival to take it over.The lower the Northern Rock share falls the easier it would be for a rival to take it over.
Experts at Lehman Brothers said in a statement: "The company appears to face a choice between running down its business, or a sale.Experts at Lehman Brothers said in a statement: "The company appears to face a choice between running down its business, or a sale.
"Any interested buyer appears to be in a strong position over price.""Any interested buyer appears to be in a strong position over price."
Mr Applegarth told the BBC he could not discuss possible takeovers, nor would he confirm the exact amount of cash withdrawn from bank branches since Friday.Mr Applegarth told the BBC he could not discuss possible takeovers, nor would he confirm the exact amount of cash withdrawn from bank branches since Friday.
"Customers are entitled to get their money - it is a logistics exercise for us, making sure we can look after our customers," he said."Customers are entitled to get their money - it is a logistics exercise for us, making sure we can look after our customers," he said.
'Hard slog''Hard slog'
On Friday, Northern Rock shares fell 32% and will be closely watched this week.On Friday, Northern Rock shares fell 32% and will be closely watched this week.
As well as extending its opening hours, Northern Rock has also increased bandwidth on its online banking, which has struggled under the volume of people trying to access the website.As well as extending its opening hours, Northern Rock has also increased bandwidth on its online banking, which has struggled under the volume of people trying to access the website.
The BBC's business editor Robert Peston said the £2bn withdrawn - which represents about 8% of the £24bn deposits it held on Thursday - was actually less than the mortgage lender and officials at the Bank of England and Financial Services Authority had feared.The BBC's business editor Robert Peston said the £2bn withdrawn - which represents about 8% of the £24bn deposits it held on Thursday - was actually less than the mortgage lender and officials at the Bank of England and Financial Services Authority had feared.
However it cannot be certain whether much more will be withdrawn in the coming days, especially from holders of Northern Rock's postal accounts - which contain about £10bn.However it cannot be certain whether much more will be withdrawn in the coming days, especially from holders of Northern Rock's postal accounts - which contain about £10bn.
Plainly, a takeover would have been a less humiliating option. But it just couldn't be done Robert PestonBBC Business Editor Read Robert Peston's blog Rock's online account woes Cameron joins Rock row Northern Rock's share pricePlainly, a takeover would have been a less humiliating option. But it just couldn't be done Robert PestonBBC Business Editor Read Robert Peston's blog Rock's online account woes Cameron joins Rock row Northern Rock's share price
The City watchdog, the Financial Services Authority (FSA), has backed comments from the Treasury, saying it is confident Northern Rock is solvent and savers could continue to deposit and withdraw funds.The City watchdog, the Financial Services Authority (FSA), has backed comments from the Treasury, saying it is confident Northern Rock is solvent and savers could continue to deposit and withdraw funds.
The BBC has learned that two banks were very interested in acquiring the beleaguered firm. However, they were concerned about doing such a big deal amid turmoil in money markets and when it was difficult and expensive to raise money from other banks and financial institutions.The BBC has learned that two banks were very interested in acquiring the beleaguered firm. However, they were concerned about doing such a big deal amid turmoil in money markets and when it was difficult and expensive to raise money from other banks and financial institutions.
Chancellor Alistair Darling said the emergency lending facility offered to Northern Rock would be transferred to any new owner.Chancellor Alistair Darling said the emergency lending facility offered to Northern Rock would be transferred to any new owner.
However once the facility expires - and the Bank will not make the expiry date public - there is no guarantee it would be extended for the new owner.However once the facility expires - and the Bank will not make the expiry date public - there is no guarantee it would be extended for the new owner.
"Most bidding banks will remain nervous about taking on a balance sheet of Northern Rock's size with the risk hanging over it of needing to refinance a large chunk of loans from the Bank of England at short notice in markets which may remain frozen," Robert Peston said."Most bidding banks will remain nervous about taking on a balance sheet of Northern Rock's size with the risk hanging over it of needing to refinance a large chunk of loans from the Bank of England at short notice in markets which may remain frozen," Robert Peston said.
Summer marketsSummer markets
Northern Rock's realisation that selling the bank had become impossible in current market conditions, persuaded the board to approach the Bank of England and ask for access to emergency loans, he added.Northern Rock's realisation that selling the bank had become impossible in current market conditions, persuaded the board to approach the Bank of England and ask for access to emergency loans, he added.
"Plainly, a takeover would have been a less humiliating option. But it just couldn't be done.""Plainly, a takeover would have been a less humiliating option. But it just couldn't be done."
Northern Rock has struggled to raise money to finance its lending ever since money markets seized up over the summer.Northern Rock has struggled to raise money to finance its lending ever since money markets seized up over the summer.
Unlike most banks, which get their money from customers making deposits into savings accounts, Northern Rock is built around its mortgage business.Unlike most banks, which get their money from customers making deposits into savings accounts, Northern Rock is built around its mortgage business.
It raises most of the money which it provides for mortgages by borrowing from banks and other financial institutions.It raises most of the money which it provides for mortgages by borrowing from banks and other financial institutions.
WHAT'S HAPPENING AT NORTHERN ROCK? Mortgage lending Northern Rock lends a large amount for mortgages, and finances this with money from banks and savers Savings Northern Rock receives a relatively small amount of money from saversMoney markets Have stopped lending money to Northern Rock due to the crisis in the US sub-prime mortgage marketBank of England Steps into the breach to give Northern Rock an emergency loan Images: PA, GettyWHAT'S HAPPENING AT NORTHERN ROCK? Mortgage lending Northern Rock lends a large amount for mortgages, and finances this with money from banks and savers Savings Northern Rock receives a relatively small amount of money from saversMoney markets Have stopped lending money to Northern Rock due to the crisis in the US sub-prime mortgage marketBank of England Steps into the breach to give Northern Rock an emergency loan Images: PA, Getty
Return to storyReturn to story