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Where did all of Northern Rock’s customers go?

Once news has broken, it becomes an avalanche.

Jerome Kerviel loses €5 billion … 7,000 news items later and it’s old news.

Credit Suisse panned over an unexpected $2.85 billion write-down … 2,000 new items later and it’s old news.

Northern Rock goes down the toilet, can’t find a buyer and is nationalised … yep, old news.

The
only thing is that sometimes old news has a twist.  In the case of
Northern Rock, it’s the question few have asked: where did all their
customers go? 

You know, those long queues,
hundreds of Brits desperate to get their money out of the ailing bank,
the first bank run in a century* … where did all the customers go?

Well,
tomorrow night you can find out if you’re in London.  Stuart Bernau,
Executive Director for Retail Distribution at the Nationwide Building
Society is presenting to the FSClub and I’ve just seen his slides.

During
2007, the trend was for residential lending to increase, up 77%, and
retail deposits to decrease, down 29%.  This was until mid-2007 when UK
consumers were still spending like crazy and saving nothing.

Then
the second half of 2007 hit, with borrowing levels being squeezed and
Northern Rock going belly up and guess what?  Nationwide’s lending
levels dived down 39% whilst deposits went through the roof, up 96%.
Apparently, all the Northern Rock disaffected savers were leaving the
bank to walk across the Nationwide branches to open accounts. 

That
meant huge volumes of new account openings and a massive cash
injection  of £4.1 billion.  It’ll be interesting to see what strain
that puts on people, processes and systems for account openings.  Come along if you’re interested.

 

* actually, the last run on a UK bank was in 1991 when Town &
Country Building Society wobbled and was rescued by the Woolwich in
November 1991

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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