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Northern Rock mortgage customers reassured

18 September 2007
Northern Rock continues to be deluged by worried customers crowding the 76 branches across the UK in an attempt to withdraw their funds and close accounts following the news that the company has been forced to accept help from the Bank of England.

However, in the FSA’s formal statement, Chairman Callum McCarthy has reassured mortgage holders and savers that the bank is still a viable operator: “The FSA's judgement on Northern Rock is that we believe it is solvent, meets all capital requirements and has a good quality loan book. We are clear it should continue to be open for business.”

An estimated £1.5 billion to £2 billion has already been withdrawn from Northern Rock by savers since the end of last week when the news broke about the mortgage company’s financial difficulties. It is understood Northern Rock's total deposits currently stand at around £23 billion.

In addition, the share price has now been reported to have plummeted by 32.93 per cent and further reports, as yet unfounded, have claimed that the besieged bank had proposed that Lloyds TSB buy it out, but the Bank of England and the Financial Services Authority (FSA) had blocked the deal.

The British Bankers' Association also attempted to bolster confidence in the bank by releasing their official statement saying: “The Northern Rock is a sound and safe bank and there is absolutely no reason for either mortgage customers or savers to worry.

“All today's announcement from the Bank of England, Treasury and the Financial Services Authority means is that the Northern Rock has had to make alternative arrangements to meet its normal everyday short term borrowing requirements.

“The British banking system is carefully regulated and overseen which ensures that all banks operate safely and prudently in the interest of their customers.”

Find out more about Northern Rock mortgages