Northern Rock : an Example of the Sub-Prime Crisis

In: Business and Management

Submitted By Kadrik
Words 1637
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Northern Rock Bank: an english exemple of the sub-prime mortgage crisis

Brief introduction: The Northern Rock-one of the UK's largest mortgage lenders has become the highest profile UK-based victim of the fallout from the global credit crunch, which stemmed from the sub-prime mortgage crisis in the US. The Bank of England has agreed to give emergency financial support to the Northern Rock and it avoided from going bust.

I. History of the bank
Northern Rock Building Society was formed in 1965 as a result of the merger of Northern Counties Permanent Building Society (established in 1850) and Rock Building Society (established in 1865). During the 30 years that followed, Northern Rock expanded by acquiring 53 smaller building societies, most notably the North of England Building Society in 1994. Along with many other UK building societies in the 1990s, Northern Rock chose to demutualize and float on the stock exchange in order to better expand their business. Demutualization is the process by which a customerowned mutual organisation changes legal form to a shareholder-owned public company. Throughout this period a concern against demutualisation was that the assets of a mutual society was built up by its members throughout its history not just the present members who would benefit, and that demutualisation was a betrayal of the community that the societies were created to serve. Northern Rock chose to address these concerns by founding the Northern Rock Foundation. From October 1997 until the government nationlisation the bank used the symbol NRK on the London Stock Exchange. The bank is based on a large site in Newcastle. Today it has nearly 6400 employees. Northern Rock has branches in Ireland, Denmark and Northern Ireland.

II. Business
A/ One of the largest UK’s mortgage lenders Northern Rock is one of the top five mortgage lenders in the UK in terms of…...

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