A Run On Northern Rock

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What happens if central bankers decides a bank is too big to fail but the bank’s customers and investors don’t agree?
We got a little closer to finding out today when depositors besieged the branch offices of Northern Rock Wreck to withdraw their savings. Long lines—or queues as the English insist on saying—formed outside of the bank. It looked very much like an old fashioned run on the bank.
Investors fled the bank’s stock as well, pushing down share prices by 30%.
The flood of withdrawals will further weaken the bank, and may well necessitate a secondary cash infusion from the Bank of England. You can bet that the people in the executive suite at Northern Rock are damn happy it’s a Friday, giving them the weekend to work out some sort of rescue plan.
In an item on the bank today, Breaking Views gave voice to the general consensus that Northern Rock is done. At least as an independent bank.
“This run on Northern Rock surely puts the final nail in its coffin as an independent bank,” Mike Verdin wrote on Breaking Views.
Northern Rock shares plunge [Guardian]
Rocky run [BreakingViews; subscription required]

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