Northern Rock is a UK bank that has its headquarters in Newcastle upon Tyne which is located in the North East of England. Northern Rock featured prominently in UK news items during late 2007 and early 2008 when it became the first significant financial organisation in the UK to suffer major difficulties related to the sub prime mortgage crisis: so great were the problems that in 2008 Northern Rock was converted from a Plc. company and taken into state ownership.
Northern Rock’s Services
As a fully fledged banking institution, Northern Rock offers the following financial services to its customers:
- Northern Rock savings - on-line, branch and postal accounts, fixed rate bonds and cash ISAs
- Northern Rock mortgages - flexible, fixed rate, variable rate, lifetime and buy to let mortgages .
- Northern Rock secured homeowner loans.
The History of Northern Rock
Northern Rock is a relative baby in terms of UK banks. The Northern Rock Building Society was created in the mid 1960s through a merging of the Northern Counties Building Society and the Rock Building Society, which both lent their names to the expanded organisation. Northern Rock continued growing as a building society, acquiring smaller UK mutual societies until government regulation in the 1990s permitted building societies to demutualise: Northern Rock effectively became a bank in 1994.
By the early 200s Northern Rock was becoming a significant player in the UK mortgage market, indeed mortgages were to become the backbone of Northern Rock’s business. In 2003 Northern Rock released some of its other credit interests (most notably selling its credit card organisation to the Co-operative Bank) in order to inject funds into its by now burgeoning mortgage business. Northern Rock took, what is now clearly apparent to be, a fateful step into the sub prime mortgage lending market in an operation that involved Lehman Brothers as underwriters.
Prior to the subprime mortgage crash Northern Rock had positioned itself as the largest mortgage lender in the UK: a fact that created a major news story when the bank entered into financial problems in late 2007. After Northern Rock successfully petitioned the Bank of England for financial assistance in September 2007, consumer confidence in Northern Rock plummeted resulting in thousands of people withdrawing money from their accounts.
At the start of 2008 Northern Rock was taken over by the British government. As a nationalised banking institution Northern Rock brokered a deal with the British government in order to repay the £27 billion it borrowed to prevent the bank from imploding. Towards the end of 2008 Northern Rock had made significant inroads into repaying the debt owed to the government, slashing the amount owed by nearly £16 billion. The nationalisation of the bank coupled with the staggering decrease in its debt fuelled renewed consumer confidence as people began to see Northern Rock as a stable and secure place to put their money.
Northern Rock continues to be a major player in the UK mortgage market.