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Northern Rock nationalisation: one year on
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After months of uncertainty, Northern Rock was nationalised on 17 February 2008 - find out what effect this has had on savers and borrowers since then
The headlines over the past week have been dominated by the possibility of Lloyds Banking Group being nationalised. But what’s happened to Northern Rock, the first bank that was taken under the Government’s control?
It’s just over one year since the Newcastle-based bank was nationalised after becoming the first British casualty of the credit crunch, when funding problems triggered the first run on a British bank in more than a century.
cut home costs
The troubled former building society, which concentrated on the mortgage and savings markets, has been hitting the headlines again recently after its 180,000 private shareholders lost an appeal regarding the value of their shares at the time the bank was nationalised.
Northern Rock shares, which were trading at more than £12 this time two years ago, were suspended at 90p per share immediately before nationalisation and its former investors have argued that the Government had deliberately undervalued the bank.
Shareholders have been the biggest losers in the Northern Rock story, but how have savers and borrowers fared over the past 12 months?
Borrowers beware
Northern Rock was the country's fifth-largest mortgage lender before effectively pulling out of the mortgage market last year.
This had a significant impact on many existing customers who were coming to the end of their current mortgage deal. The bank wrote to them and said it couldn’t offer them a new deal: instead they were advised to remortgage with an alternative lender.
However, for thousands of Northern Rock borrowers this wasn’t possible.
by Clare Francis, site editor at moneysupermarket.com, 21 February 2009
