by Calculated Risk on 9/15/2007 09:14:00 PM

From the Telegraph: Angry savers force Northern Rock to be sold (hat tip FFDIC)

Northern Rock, the crisis-hit bank under siege from thousands of its customers, was preparing itself last night for a sell-off, The Sunday Telegraph can reveal.

One plan being worked on by City bankers was to divide the company's £100 billion mortgage portfolio between the other major banks, in what would amount to a private-sector rescue of the lender.

And The Times: Bankers fear £12bn run on Rock (hat tip Barley)

NORTHERN ROCK, the mortgage bank rescued by the Bank of England last week, could see as much as £12 billion - nearly half of its deposits - withdrawn by worried savers, experts say.
...
Senior executives at Northern Rock spent yesterday at its New-castle head office monitoring events, but the lender is seen to have little future as an independent entity. It held talks about a possible takeover by Lloyds TSB before the crisis and is expected to be sold off cheaply to a rival.

The Guardian reports: Fears grow for British economy as panic over Northern Rock spreads

US Treasury Secretary Hank Paulson flies in to London tomorrow to discuss the worsening global credit crisis with Chancellor Alistair Darling, as fears intensify that the lending squeeze could be the last straw for Britain's buy-now-pay-later economy.

by Calculated Risk on 9/15/2007 04:39:00 PM

From the Telegraph: Customers outside a Northern Rock branch in Kingston Upon Thames.

From the Telegraph: Police help to disperse Northern Rock queues (hat tip DannyHSDad)

Northern Rock has apologised to customers who spent a second day queuing to withdraw money after the company asked the Bank of England for emergency funding.

A spokesman has asked customers to remain calm and repeated assurances that money is available.

The bank's website had crashed but is currently running with a message asking users to be patient and claiming that transactions will be dealt with.

Long lines formed at 72 branches across the country even before counters opened this morning.

Here is a Bloomberg article: Northern Rock Experiences Second Day of Withdrawals (hat tip energyecon)

A key question is: Does the UK have something similar to the U.S. FDIC insurance?

I've found this: the Financial Services Compensation Scheme

1. I have my money in a joint account in a High Street bank. How would FSCS pay compensation if the bank failed?

The compensation limit of £31,700 applies to each depositor for the total of their deposits with an organisation, regardless of how many accounts they hold or whether they are a single or joint account holder. In the case of a joint account FSCS will assume that the money in that account is split equally between account holders, unless evidence shows otherwise.

This means that each account holder in a joint account would be eligible for compensation up to the maximum limit.

by Anonymous on 9/15/2007 12:05:00 PM

Because I got up this morning and the first thing I fished out of my inbox involved a review of Easy Al Greenspan's new book, that's why.

If you can think of a better response to that, fire away in the comments. I'm just going to dance.

by Calculated Risk on 9/14/2007 08:35:00 PM

From the FWDailyNews: Midwest commercial real estate index tanks (hat tip vader)

The Midwest led the biggest-ever drop in the national quarterly commercial real-estate index compiled by the Society of Industrial and Office Realtors.

The national index dropped nearly 4.5 points, to 113.7, for the summer of 2007. That is the weakest score since SIOR began compiling the index nearly two years ago.
...
Nationally, the weakness was broad-based, with all 10 components measured in the index down from the spring. The industrial market was the hardest hit, scoring 112.3, down about 7 points. The office market dipped less than 1 point, scoring 114.9.

This article is referring to the August survey. The SIOR puts out a CRE report every quarter (the Q3 report isn't on their website yet), but here is the Q2 report. SIOR is the Society of Industrial and Office Realtors®.

This index might be worth watching.

by Calculated Risk on 9/14/2007 07:27:00 PM

From the Dow Jones: Morgan Stanley Doesn't Like Revised Reddy Ice Deal (hat tip idoc)

Reddy Ice Holdings Inc.'s (FRZ) path to completing its $1.1 billion buyout by GSO Capital Partners LP looks rocky, after the company revealed in a filing that Morgan Stanley, the bank that has agreed to provide financing for the deal, disagrees with amended terms of its merger agreement.

This deal is small compared to many of the other deals in the pipeline, but I think it shows the investment banks are looking for any reason to exit from these LBO deals. I'm not sure Morgan Stanley is objecting to the amended terms - the amendments do not appear detrimental to Morgan Stanley - instead they appear to be arguing that the deal is off simply because they didn't consent to the amended terms. Here is the Reddy Ice SEC Schedule 14A:

Following the execution of the amendment to the merger agreement, GSO informed Morgan Stanley that the amendment had been executed. Morgan Stanley then informed GSO that Morgan Stanley believed that by entering into the amendment without Morgan Stanley's consent, the Buyers had disabled themselves from satisfying certain conditions to Morgan Stanley's commitment to provide the debt financing pursuant to the debt financing commitment letters, and, furthermore, that Morgan Stanley was reserving its rights with respect thereto. In response, GSO reiterated its position to Morgan Stanley—that Morgan Stanley's consent was not required in order to enter into the amendment, and that the Buyers had not disabled themselves in any manner from satisfying all of the conditions to Morgan Stanley's commitment. GSO promptly notified the Company of Morgan Stanley's position and GSO's response to Morgan Stanley.

More work for the lawyers.