Caught between a Northern Rock and a hard place
The run on Northern Rock’s one lonely outpost in Ireland seems to have crawled to a stroll. Maybe this is down to the announcement by the British Chancellor of the Exchequer to promise to pay the bills or maybe it’s …
The run on Northern Rock’s one lonely outpost in Ireland seems to have crawled to a stroll. Maybe this is down to the announcement by the British Chancellor of the Exchequer to promise to pay the bills or maybe it’s the cold autumnal snap which makes standing around on nippy street corners a little uncomfortable. It could be also due to the bank’s decision to send in the PR heavyweights to steady the ship. The crisis seems to have passed for now – until the next bank gets a dose of the jitters because US banks and lending institutions decided it was a great idea to give great big lumps of cash to Cletus Spuckler and friends.
What was interesting to observe from the last few days was the age profile of those queueing to get their cash back in Dublin with older savers who were attracted to the bank which offered its highest deposit rates on internet-only accounts out in force.
You don’t need Maccer to explain why the sight of these folks standing around waiting for the bank to open its doors was hugely telling. Whatever about new Ireland’s flash and cash, there are still plenty of citizens who are the same slow, steady savers of old.
They were the ones who had made the cash but didn’t spend all of it on foreign property, new cars and cosmetic surgery. They were the ones who, having researched the best rates available, spurned the usual AIB and Bank Of Ireland and An Post accounts in favour of Northern Rock’s leggy rates. They had probably advised their kids to do the same thing, but their feckless offspring, the ones who don’t remember the economic doom and gloom experienced by their parents, probably didn’t pay any attention (or more likely didn’t have any huge five and six figure sums to salt away).
And yes, these bank customers were fuming because that is, after all, the Irish pre-set in times like this. Fuming at the notion of queueing to get their cash back on a street. Angry at missing their rounds of bridge and golf and coffee mornings. Outraged at having cameras pointed at their face and knowing the neighbours would be watching. Raging at having tried to make a few bob the legal way and getting caught.
But you couldn’t escape the sense of worry and panic coming from the queue. They had trusted their life savings to a bank and now, that bank was in some kind of trouble. While some could probably give you a lecture in the ins and outs of the sub-prime markets, others simply knew that their money was in that bank and there was a chance they might not get it back. If you drew a collective thought bubble over them, the caption would probably go ‘bank runs aren’t supposed to happen in the 21st century are they?’
Yet there’s no doubt when you listen to the bean-counters and financial smart boys that this is only the start of things and the Northern Rock incident won’t be the only time you see queues like that forming outside the door of a financial institution. Those pundits who have been predicting economic downturns, recessions and depressions for the last couple of years are preparing to crow. Expect a run on new matresses in the coming months.