Mortgage Crisis Comes Out onto Street
// Customers of Northern Rock in London queue for their deposits
International mortgage crisis is just beginning, concluded investors on Friday after the Bank of England, Europe’s most conservative financial regulator, offered an emergency loan to Northern Rock, one of Britain’s largest mortgage banks. Northern Rock turned out to be unable to overcome the shortage of liquid funds. So far, the Bank of England’s aid measures have not helped. On the contrary, Northern Rock’s customers queued up for their deposits, and Europe’s stock markets began falling.
For the first time since 1973, the Bank of England gave support to British banks, by offering an emergency loan to Northern Rock, which lacks funds necessary to pay its debts. The Bank of England’s decision gave a shake to the international stock market. For instance, Northern Rock’s shares fell by 30 percent after the decision was announced.
Panic began among Northern Rock’s customers. They queued up to take away their deposits. Adam Applegarth, head of Northern Rock, tried to calm the customers on Friday, saying that “the business is going normally”. However, the long queues on the streets near the bank’s offices proved the opposite.
Experts believe the fact that the Bank of England, Europe’s most conservative financial regulator, offered an emergency loan to Northern Rock proves that it admits of a serious threat to Great Britain’s economy.
The loan’s amount is not disclosed. Northern Rock has already warned its investors that the anticipated profits at year-end decrease from £647 million (ˆ939 million) to £500 million (ˆ726 million) -- £540 million (ˆ784 million).
www.kommersant.com
All the Article in Russian as of Sep. 15, 2007
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