Bank customers rush to withdraw savings
Sunday September 16 2007
The run on embattled bank Northern Rock continued in Britain yesterday with customers queueing outside their local branches from dawn as they scrambled to withdraw savings.
Here on Friday afternoon, some of the 25,000 Irish customers of Northern Rock were outside the bank's Dublin offices and queued for up to two hours to withdraw deposits.
Northern Rock is Britain's fifth biggest mortgage lender, but customers on both sides of the Irish Sea began to withdraw savings en masse after the Bank of England bailed out the bank. The level of withdrawals was high, with a reported £1 billion taken out.
Northern Rock said on Friday it was facing severe difficulties raising cash to cover its liabilities amid the ongoing global credit squeeze.
The bank is the first major British financial institution to be hit severely by the global credit crunch sparked last month by a crisis in the US sub-prime, or high-risk, mortgage sector.
Shares in the bank lost one-third of their value as customers ignored assurances from the bank's chief executive and financial regulators here and in the UK that their money was safe.
Thousands of Irish depositors looking to access their cash online encountered problems as the bank's website struggled to cope and phone lines came under severe pressure. Irish savers are understood to hold €2.3bn in savings at the bank -- an average of more than €90,000 each.
Eugene Reilly from Louth village was one of the customers outside the doors of Northern Rock's Harcourt Street administration centre in Dublin yesterday afternoon.
"I travelled up from Louth this morning because I can't get in contact with them over the internet or by phone -- both have been jammed for the past two days. I'm not starting to panic just yet, but at the same time I want to get my money out of it."
Finance Minister Brian Cowen said Irish customers should be reassured by the Bank of England's statement.
"They judge that Northern Rock is solid, meets its regulatory capital requirement and has a good loan book."
Northern Rock has issued two helpline numbers for customers: 1850 315115 is open from 8am-8pm Monday-Friday, 8pm-4pm on Saturday and 10am-3pm on Sunday; and (01) 602 0324 operates from 9am-5pm Monday to Friday.
Ireland's Financial Regulator has also set up a helpline at 1890 777 777.
Fianna Fail's Chris Andrews has called on the Irish Financial Regulator to take immediate action. He said the bank should be ordered to set up help centres in hotels so customers could be reassured.
"Due to the fact that there are no Northern Rock branches in Ireland and all their business is carried out over the internet, people have no one to talk to," he said.
Central Bank Governor John Hurley said Irish financial institutions were well capitalised with very little exposure to the US sub-prime sector. The Governor said he didn't see a Northern Rock-type situation arising in Ireland.
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