Northern Rock savers have taken out £10-14 billion in deposits from the bank since it plunged into financial crisis seven weeks ago, with chancellor Alistair Darling urged to impose new management to restore confidence. Sunday Times, Financial Times. The Observer.
The figure equates to almost 60% of the total £24 billion in deposits held at the bank before it was forced to go to the Bank of England for emergency funding on September 13.
Northern Rock rejected as a “significant overestimate” a Sunday Times report that savers had withdrawn £14bn from the lender since it was forced to go to the Bank of England for emergency funding on September 13.
Close to £3 billion was withdrawn in the three-day run on the bank in mid-September.
The £14 billion exodus of funds underlines the lack of confidence in Northern Rock, despite the government’s pledge to guarantee people’s savings.
So far, Northern Rock, still led by chief executive Adam Applegarth, has borrowed £22.8 billion from the Bank to pay withdrawals and fund lending.
This could rise to close to £30 billion by the end of the year.
Pressure is growing on the Bank of England and its embattled governor Mervyn King to extend emergency funding to stricken bank Northern Rock beyond February.