Northern Rock shares continue to plunge

Hundreds of panicky depositors converged on branches of embattled British bank Northern Rock to grab savings Monday. Savers showed up at dawn to claim their money from Britain's fifth largest mortgage lender, which has fallen victim to a global credit squeeze and on Friday had to be rescued by the Bank of England. Northern Rock shares continue to plunge Northern Rock's share price fell by 31.05 percent to 302 pence in early trading on London's FTSE 100 index of top shares. The latest plunge came after the share price had closed down 31.46 percent on Friday after the BoE agreed to an emergency lending facility. Northern Rock has yet to confirm whether it has begun borrowing from the BoE's emergency fund. The bank on Friday said it was facing severe difficulties raising cash to cover its liabilities in the ongoing global credit crunch, triggered by a sharp downturn in the US housing sector and a wave of defaults by high-risk US borrowers. Northern Rock's market value has slumped by more than half to 1.27 billion pounds (1.83 billion euros, 2.54 billion dollars) from 2.69 billion pounds at the close of trade last Thursday. Northern Rock's market value has slumped by more than half to 1.27 billion pounds (1.83 billion euros, 2.54 billion dollars) from 2.69 billion pounds at the close of trade last Thursday. About 2.0 billion pounds was withdrawn over the counter or online by Northern Rock's 1.4 million savers over Friday and Saturday, reports said. As analysts said Northern Rock faced an imminent takeover, British finance minister Alistair Darling voiced confidence Monday that the country's economy could weather the storm surrounding the mortgage lender. He said savers could withdraw their money but stressed that the British economy was "strong" and had low interest rates, which would allow politicians and officials to "deal with this particular problem." But former US Federal Reserve chairman Alan Greenspan warned in an interview published Monday that British consumers were in for more pain as he predicted "difficulties" ahead in the country's housing market. Worried Northern Rock customers besieged their local branches on Friday and Saturday to withdraw savings despite assurances from politicians, regulators and the bank itself that it would not fall victim to the global credit squeeze. In the present circumstances, commercial banks are nervous about lending to each other because of fears centered on bad investments linked to US home loans. That sentiment has led to a shortage of cash for banks like Northern Rock to lend to customers. Prospects for a potential takeover bid of Northern Rock have meanwhile been boosted after Bank of England sources were reported to have said that that any buyer would still have access to the emergency loan facility set up Friday. According to the Sunday Telegraph, one rescue plan involved carving up Northern Rock's mortgage book -- totalling 100 billion pounds -- and distributing it amongst other lenders. The Mail on Sunday, quoting senior banking figures, said that rival banking groups would wait until Northern Rock was on the verge of collapse before making a bid.

Northern Rock shares continue to plunge

Northern Rock's share price fell by 31.05 percent to 302 pence in early trading on London's FTSE 100 index of top shares.

The latest plunge came after the share price had closed down 31.46 percent on Friday after the BoE agreed to an emergency lending facility.

Northern Rock has yet to confirm whether it has begun borrowing from the BoE's emergency fund.

The bank on Friday said it was facing severe difficulties raising cash to cover its liabilities in the ongoing global credit crunch, triggered by a sharp downturn in the US housing sector and a wave of defaults by high-risk US borrowers.

Northern Rock's market value has slumped by more than half to 1.27 billion pounds (1.83 billion euros, 2.54 billion dollars) from 2.69 billion pounds at the close of trade last Thursday.

Northern Rock's market value has slumped by more than half to 1.27 billion pounds (1.83 billion euros, 2.54 billion dollars) from 2.69 billion pounds at the close of trade last Thursday.

About 2.0 billion pounds was withdrawn over the counter or online by Northern Rock's 1.4 million savers over Friday and Saturday, reports said.

As analysts said Northern Rock faced an imminent takeover, British finance minister Alistair Darling voiced confidence Monday that the country's economy could weather the storm surrounding the mortgage lender.

He said savers could withdraw their money but stressed that the British economy was "strong" and had low interest rates, which would allow politicians and officials to "deal with this particular problem."

But former US Federal Reserve chairman Alan Greenspan warned in an interview published Monday that British consumers were in for more pain as he predicted "difficulties" ahead in the country's housing market.

Worried Northern Rock customers besieged their local branches on Friday and Saturday to withdraw savings despite assurances from politicians, regulators and the bank itself that it would not fall victim to the global credit squeeze.

In the present circumstances, commercial banks are nervous about lending to each other because of fears centered on bad investments linked to US home loans. That sentiment has led to a shortage of cash for banks like Northern Rock to lend to customers.

Prospects for a potential takeover bid of Northern Rock have meanwhile been boosted after Bank of England sources were reported to have said that that any buyer would still have access to the emergency loan facility set up Friday.

According to the Sunday Telegraph, one rescue plan involved carving up Northern Rock's mortgage book -- totalling 100 billion pounds -- and distributing it amongst other lenders.

The Mail on Sunday, quoting senior banking figures, said that rival banking groups would wait until Northern Rock was on the verge of collapse before making a bid.