Skip to: Content
Skip to: Site Navigation
Skip to: Search

September 5, 2008 10:30:13 PM CDT

Learn about Newser Points »

« Back to the grid | Next story »

Northern Rock: Post Mortem of a Spectacular Fall

Posted Mar 20, 08 1:49 PM CDT in World,  Business 

(Newser) – The collapse of Northern Rock, Britains third-largest lender, was "the messiest banking crisis in the Western world resulting from the global credit crunch,'' a UK lawmaker tells Bloomberg in a post mortem of the disaster. “They really screwed it up,” said one analyst of the bank’s hard-charging and ambitious management team. "They should have had other levers to pull." Unable to save itself or attract a buyer, the bank sarcastically called Northern Wreck was taken over by the government last month.

Northern Rock had skyrocketed after its 1997 IPO, amassing nearly $198 billion in assets by focusing on residential mortgages, reselling packaged debt as bonds on the global market. The bank's collapse resulted from a failure to hedge against the possibility of a shortage of credit. It was an extraordinary error,'' another analyst tells Bloomberg. In June, the Rock began its freefall and saw stock prices plummet 83% in three months.

Source Bloomberg

0 comments | Print E-mail | Digg Seed this on Newsvine Add this link to Del.icio.us StumbleUpon

Related Newser Stories

  • Lehman Posts $2.8B Loss, Stuns Wall St.

    Jun 9, 08 11:00 AM CDT
    Lehman Posts $2.8B Loss, Stuns Wall St. Lehman Brothers shocked Wall Street today by posting a $2.8 billion quarterly loss, its first in 14 years and far worse than expected, the Wall Street Journal reports. Other downmarket reports added to investor anxiety, sent stocks falling, and boosted fears that banks and securities firms remain troubled. As expected, Lehman also announced a plan to raise $6 billion in new capital. More »

  • Rogue Traders Bag $200M in Credit Hysteria

    Mar 20, 08 7:46 AM CDT
    Rogue Traders Bag $200M in Credit Hysteria The UK's financial regulator is probing whether malicious traders attacked the share price of the country's largest mortgage lender yesterday by spreading rumors it faced a major liquidity crisis. The Telegraph reports that HBOS saw its shares plunge 20% as an email circulated suggesting the firm was facing trouble. The hunt is on for at least one rogue trader who shorted HBOS and made $200 million. More »

  • Feds Brace for a Wave of Bank Failures

    Feb 26, 08 7:13 AM CST
    Feds Brace for a Wave of Bank Failures Federal regulators are gearing up for as many as 100 bank failures in the next year—the most since the savings and loan crisis that saw more than 1,000 S&Ls go belly up in the ’80s and ’90s—as the subprime contagion continues to decimate the health of US financial institutions, reports the Wall Street Journal today. More »

  • Northern Rock Boss Quits as Fall Continues

    Dec 13, 07 7:54 AM CST
    Northern Rock Boss Quits as Fall Continues The CEO of collapsing British bank Northern Rock quit this morning without comment, reports the Financial Times. Adam Applegarth resigned last month but had pledged to stay on as CEO until the end of January to guide the struggling company through its upcoming sale. But investors are troubled by the slow speed of the transaction, with Applegarth taking the blame. More »

  • UK Bank Chief Takes Heat After U-Turn

    Sep 20, 07 9:26 AM CDT
    UK Bank Chief Takes Heat After U-Turn The leader of the Bank of England, the Fed's counterpart in the UK, is facing substantial pressure to resign. Only last week Mervyn King had declined to offer loans for inter-bank trading to ease credit markets, vowing to discourage the "moral hazard" of risk-taking that led to Northern Rock's collapse. But yesterday the bank injected £10 billion into the money market, and London's financial world is crying foul. More »

Adam Applegarth, ex-CEO of Northern Rock.   (AP Photo)
A sign on the facade of a branch of Northern Rock is seen in London.   (AP Photo/Matt Dunham)
The facade of a branch of Northern Rock is seen in London, Monday, Feb. 18, 2008.   (AP Photo/Matt Dunham)
A Northern Rock clock outside of a branch of the bank in Newcastle, England.   (AP Photo/Scott Heppell)
« Prev« Prev | Next »Next » Slideshow

Threads (1 of 1)

Tags

credit crisis  • subprime crisis  • Northern Rock  • Bank of England  • bank failure  • CDO  • Adam Applegarth


Loading...

Premium Articles from HighBeam

Find more articles like this

Today's Most Popular


Other Business Stories

What is Newser?

2008 Codie Finalist

Newser gives you more news in less time. We search for the best and most important stories all over the web, read them for you, and deliver concise and sharp summaries—along with links to the full text. Newser provides a way to stay on top of an ever-expanding horizon of news and opinion—politics, sports, business, trends, technology, personalities, crimes, and controversies. Newser keeps you not just better informed, but, with our signature graphic interface and smart condensed format, more enjoyably informed.

Learn more »