DEATH OF THE ROCK
When I was a financial journalist, Northern Rock had a reputation for being a little, well, sharp. The deals they offered to savers and borrowers looked attractive but it generally paid to look below the surface. On one occasion, I recall, they shifted many thousands of customers out of one account into another that paid less interest, without any warning at all. Here's a contemporary account from the Telegraph.
Over the years, in other words, Northern Rock has run the reserves of customer goodwill dangerously low. So even though most experts agree that savers' funds are not at risk in the current credit crisis, customers see little reason to trust the Rock and are withdrawing their funds in droves.
Banks used to be viewed as solid, rather staid, but entirely reliable institutions. These days they are regarded (quite correctly) as rapacious, profit-driven and untrustworthy. No wonder the Rock's customers are rushing to get at their cash. Whatever the experts say, if I was a customer, I'd be doing the same.
I predict that within a year, the Northern Rock's assets will have been sold and the brand, tainted beyond repair, will have disappeared from Britain's high streets. And you have to say it serves them right.
UPDATE: Robert Peston's blog on the BBC explains the obstacles to a sale of Northern Rock. One way or another, though, I still reckon it will happen.
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2 comments:
Stange that no one rushed round to Barclays when their bunch of incompetent management actually needed to be bailed out by the Bank of England not once but twice in a month and for over £2 billion. Couldn't possibly have anything to do with the fact that Barclays are City based whilst Northern Rock are from the North could it?
Also if, as the Sick Squid claims, the NR depositors are suffering from revultion at their treatment of customers how come they went into the account in the first place?
Also Sqid your memory fails you. The incident that you claim to recall so clearly with NR moving customers is the wrong way round - they actually moved the customers into either better paying accounts and/or ones with better terms and conditions and/or ones with shorter notice periods. I should know I was one of them.
As for the queues why is it that when the BBC et al show the interviews if you look behind into the branch there is hardly anyone in the banking lobby?
I was in an NR branch of Friday and the queues were actually shorter than the ones in Barclays round the corner (but no TV cameras there).
Purist, we may be talking about different incidents but the Rock certainly did move savers into lower-paying accounts, triggering an OFT enquiry. I've added a comtemporary report from the Telegraph to the post.
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