North Rock Bank Fail
Analysis of Difficulties and Conflicts
about Northern Rock Affair
Name:
Student ID:
1989 Words
Contents
Introduction 3
Findings 4
1. Development Background 4
2. Reasons of failure in Northern Rock 5
3. Strategy for rescue of Northern Rock 6
4. Results of rescue of Northern Rock 7
4.1 Bank of England 7
4.2 Failure in supervisory authorities 8
4.3 Proposals for UK reforms 9
Conclusion 10
Reference 11
Appendix 12
Introduction
As Britain’s fifth largest mortgage bank, Northern Rock faced funding and management difficulties which is led by increased pressure among banks to sell, pushed down prices, and impacted the market for interbank loans due to the global market liquidity squeeze for securities happened in 2007. Hence, Northern Rock’s difficulties arose on account of its inability to manage its credit risk and liquidity risk. This report will present an analysis relations between investment and commercial activities of Northern Rock and interest in bank operation strategies, rely on analyzing the problems about inability in managing its credit risk and liquidity risk. It will also outline its rescue and reforms by the UK Government and financial authorities towards the end of the same year and the beginning of 2008 such as tripartite regulatory system, Treasure, the Financial Services Authority (FSA) and BoE operates.
Findings
1. Development Background
Northern Rock described itself as a “specialised lender, whose core business is the provision of UK residential mortgages funded in both retail and wholesale markets”. Northern Rock’s assets increased by 20% plus or minus 5% for the last 17 years. (Treasury Committee Report 2008)
To sustain high grow in assets, it changes the structure of
about Northern Rock Affair
Name:
Student ID:
1989 Words
Contents
Introduction 3
Findings 4
1. Development Background 4
2. Reasons of failure in Northern Rock 5
3. Strategy for rescue of Northern Rock 6
4. Results of rescue of Northern Rock 7
4.1 Bank of England 7
4.2 Failure in supervisory authorities 8
4.3 Proposals for UK reforms 9
Conclusion 10
Reference 11
Appendix 12
Introduction
As Britain’s fifth largest mortgage bank, Northern Rock faced funding and management difficulties which is led by increased pressure among banks to sell, pushed down prices, and impacted the market for interbank loans due to the global market liquidity squeeze for securities happened in 2007. Hence, Northern Rock’s difficulties arose on account of its inability to manage its credit risk and liquidity risk. This report will present an analysis relations between investment and commercial activities of Northern Rock and interest in bank operation strategies, rely on analyzing the problems about inability in managing its credit risk and liquidity risk. It will also outline its rescue and reforms by the UK Government and financial authorities towards the end of the same year and the beginning of 2008 such as tripartite regulatory system, Treasure, the Financial Services Authority (FSA) and BoE operates.
Findings
1. Development Background
Northern Rock described itself as a “specialised lender, whose core business is the provision of UK residential mortgages funded in both retail and wholesale markets”. Northern Rock’s assets increased by 20% plus or minus 5% for the last 17 years. (Treasury Committee Report 2008)
To sustain high grow in assets, it changes the structure of