Following problems in the credit markets Northern Rock sought and received a liquidity support facility from the Bank of England during September 2007. This led to a run on the bank with many customers queuing outside branches to withdraw their savings.
On 22 February 2008 the bank was taken into state ownership. The nationalisation was a result of two unsuccessful bids to take over the bank, neither being able to fully commit to repayment of taxpayers’ money. Within three to four years the bank is planning to repay the government debt. One of the measures they have taken is by reducing their numbers of staff. As of 30 September 2008 the bank is repaying the debt well ahead of target, owing a net balance of only £11.5 billion of the loan which stood at £26.9 billion at the end of 2007.
By October 2008 customers appeared to be regaining confidence in the bank, when it emerged that there had been a surge in the number of new accounts which had been opened. People appeared to see the Northern Rock as a safe place to put their money, after a number of other banks around the world ran into trouble. This will be in part as a result of its’ reducing debt levels.
