An attempt to organise a takeover of Northern Rock was underway last night, according to The Times , as regulators, government and bank officials sought to rescue Britain's fifth largest mortgage lender before panic among its customers leaves it beyond rescue.
The Bank of England made clear the loan facility which it has given to Northern Rock – allowing it to continue to remain afloat despite a cash crunch that has left it short of funds – will remain available to any institution that buys the lender.
The siege of Northern Rock’s branches by thousands of its 1.4 million customers nationwide was expected to continue this morning, The Times reports, despite new pleas for calm led by Alistair Darling, the Chancellor, and Sir Callum McCarthy, chairman of the FSA.
Between £1.5bn and £2bn was pulled out of Northern Rock on Friday and Saturday after news broke of the Bank of England’s intervention. Online withdrawals continued over the weekend in the first known instance of an electronic bank run. Experts gave warning that the bank may ultimately see withdrawals of as much as £12bn – half of its total deposits – as customers scramble to secure their funds.
Alan Greenspan, the former head of the Fed, has warned Britain's housing market is heading for a painful correction, The Daily Telegraph says.
In an interview with the paper, Greenspan warns of "difficulties" ahead for UK home owners, as rising interest rates bring house price growth to a shuddering halt.
Greenspan also says Britain's economy is even more exposed to the financial turmoil than that of the US. The 81-year-old economist, an adviser to Gordon Brown, said that recent increases in house prices - particularly those in London and the South East - were unsustainable.
"There are going to be some difficulties," he says. "Can [the boom] last No. You're already beginning to see the mortgage rates are moving; a lot of the two-year fixes are beginning to unwind, and the teaser rates are going," he adds, referring to mortgages where rates jump after an introductory period.
Russia President Vladimir Putin says Russia has no intention of cutting its production of oil and gas and will probably increase it, according to The Guardian.
But he denied that this would increase the country's dependence on energy exports, maintaining the Russian economy was proportionately less reliant on exports of oil and gas than it was when he came to power eight years ago.
His statement of reassurance follows comments made by a senior official two days before to the effect that Russia's oil and gas bonanza was almost as much trouble as it was worth.IFAonline
Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till