Northern Rock bounces back

Last Modified: 18 Sep 2007
By: Benjamin Cohen, Faisal Islam

The share price is up and withdrawals are down. Has the crisis subsided?

The fallout

The immediate crisis may have abated, but there will still be consequences for Northern Rock, the government, the Financial Services Authority and the Bank of England.

The Chancellor and the Governor of the Bank of England will be desperately hoping that other banks that also borrow money on the US markets don't have similar problems - although the Chancellor said there would be help available if this happened.
Faisal Islam reports on the falllout from the Northern Rock crisis.

The Treasury's decision to offer protection to Northern Rock's savers appeared to be working today.

After three days in which huge queues formed outside branches and £2bn was withdrawn, there have been fewer people seeking to access their savings.

Crisis easing

The combined might of the Bank of England, the Treasury and the regulator have staunched the four-day run on the Northern Rock bank.

After several days in which huge queues formed outside branches and more than £2bn was withdrawn, there have been fewer people turning up to access their savings.

Watch the interview with the Chief Executive of the FSA, Hector Sants.

Help offered

But Northern Rock shareholders have been saddled with losses. Gordon Brown said the government's "decisive action", coupled with a strong economy, had secured people's savings.

The Chancellor Alistair Darling said other banks hit by the turmoil in the American markets would also receive help if they needed it.

The Financial Services Authority (FSA), Britain's financial regulator, said it would review the compensation scheme for savers.