Ten years ago this week Britain witnessed a run on Northern Rock, an event which sent ripples of panic through the whole financial and political systems. The prime minister, Gordon Brown, described it later as his worst moment in Downing Street, and he, along with many others, will never forget the image of pensioners and savers, armed with flasks of tea and deckchairs, queuing for days outside the bank’s branches.
Bank runs are scary things and if this one had not been contained, Mr Brown wrote, it could quickly have spread to the other banks, ATMs would soon run out of cash, credit cards wouldn’t work, and within days people would struggle to put food on the table. Riots and social unrest and breakdown would soon follow.
Northern Rock was Britain’s first bank run in over a century and, amazingly, the only bank run in any developed country during the financial crisis. Tim Geithner, chairman of the New York Fed at the time, feared it would spread to the US where there were banks which appeared a good deal more vulnerable than Northern Rock. But he took action to cut it off, the Bank of England didn’t and the rest is history.
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Read more:
UK lenders plan to close record 762 branches as banks pivot towards digital space
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The extraordinary thing about this story is that it has a happy ending, or at least happy for some. It now emerges that the UK government, which provided emergency funding of £37 billion for Northern Rock and then nationalised the stricken bank, has effectively got all its money back and will actually make a profit.
No Northern Rock depositor lost money – the government’s last-minute rescue saw to that. But shareholders were wiped out, as they invariably are when a company goes bust. That’s the difference between risk capital and deposits. Now they feel it was they who got the raw end of the deal. The UK Treasury has sold off most of the Northern Rock assets, essentially mortgages on houses all over the country, and recouped most of its £37bn of funding it made available. It is now left with a debt of £4.6bn, owed to it by NRAM, the body it set up to manage the bank’s loans. The assets that remain are worth a good deal more than that.
Whoever would have forecast that when the run was at its height? Certainly not the seriously rattled denizen of Number 10 Downing Street or his equally panicky neighbour, the chancellor Alastair Darling. No one was thinking of making a profit then,
Shareholders of course haven’t a chance of getting their money back. If the government hadn’t intervened, Northern Rock would have been bust within hours and shareholders would have got nothing anyway. The last thing in the world Gordon Brown wanted, as he confessed himself, was to nationalise a bank – even Old Labour had never done that and Mr Brown was determined that his New Labour government would avoid it at any cost. When all his efforts to find a buyer for the carcase failed, he actually insisted on changing the word “nationalisation” in the press release to “taken into temporary state ownership”, and announced his intention of privatising Northern Rock again as soon as possible.
The bank was then broken into a "good" bank, which was sold to Virgin Money, and a "bad" bank, all the unrealisable assets and loans, which were left with the government. Losses on those assets, largely consisting of mortgages which Northern Rock offered at apparently reckless rates – up to 125 per cent of a house's value on up to ten times a mortgagee's salary – was expected to be huge. Yet remarkably few homeowners defaulted, bad debts have been well below expectations and the Northern Rock book turned out to be a relatively good one. So, the government, a most reluctant investor, ends up with a handsome profit and shareholders lose all. C'est la vie.
There are many lessons to be learned from this, not least that state intervention is not always a bad thing. The government also made a (modest) profit on the £22bn it pumped into Lloyds/HBOS a year later, although it will never recoup all the £57bn it pumped into RBS. It also took a number of other former building societies, such as Bradford & Bingley, into state ownership and has recouped its investment there. In all cases, depositors were saved, most of the banks survived to fight another day (Lloyds is today the biggest financial institution in Europe), and, most importantly of all, the financial system survived.
The biggest lesson however is that there never should have been a run on Northern Rock in the first place – and there wouldn’t have been if the Bank of England had provided it with funds at the outset. It was a fundamentally healthy bank which unfortunately relied too heavily on the wholesale and securitisation markets which dried up when the sub-prime crisis broke. Lloyds wanted to save it but the Bank’s governor, Mervyn King, refused to support it, quoting his widely discredited principle of “moral hazard” – if he bailed out Northern Rock, he insisted, other banks could behave even more recklessly knowing they had the same safety net.
A week later he had to turn tail and pump in the funds anyway.
LOVE%20AGAIN
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Results
2.15pm: Maiden (PA) Dh40,000 1,200m
Winner: Maqam, Fabrice Veron (jockey), Eric Lemartinel (trainer).
2.45pm: Maiden (PA) Dh40,000 1,200m
Winner: Mamia Al Reef, Szczepan Mazur, Ibrahim Al Hadhrami.
3.15pm: Handicap (PA) Dh40,000 2,000m
Winner: Jaahiz, Fabrice Veron, Eric Lemartinel.
3.45pm: Handicap (PA) Dh40,000 1,000m
Winner: Qanoon, Szczepan Mazur, Irfan Ellahi.
4.15pm: Sheikh Hamdan bin Rashid Cup Handicap (TB) Dh200,000 1,700m.
Winner: Philosopher, Tadhg O’Shea, Salem bin Ghadayer.
54.45pm: Handicap (PA) Dh40,000 1,700m
Winner: Jap Al Yassoob, Fernando Jara, Irfan Ellahi.
Ordinary Virtues: Moral Order in a Divided World by Michael Ignatieff
Harvard University Press
The more serious side of specialty coffee
While the taste of beans and freshness of roast is paramount to the specialty coffee scene, so is sustainability and workers’ rights.
The bulk of genuine specialty coffee companies aim to improve on these elements in every stage of production via direct relationships with farmers. For instance, Mokha 1450 on Al Wasl Road strives to work predominantly with women-owned and -operated coffee organisations, including female farmers in the Sabree mountains of Yemen.
Because, as the boutique’s owner, Garfield Kerr, points out: “women represent over 90 per cent of the coffee value chain, but are woefully underrepresented in less than 10 per cent of ownership and management throughout the global coffee industry.”
One of the UAE’s largest suppliers of green (meaning not-yet-roasted) beans, Raw Coffee, is a founding member of the Partnership of Gender Equity, which aims to empower female coffee farmers and harvesters.
Also, globally, many companies have found the perfect way to recycle old coffee grounds: they create the perfect fertile soil in which to grow mushrooms.
Dr Amal Khalid Alias revealed a recent case of a woman with daughters, who specifically wanted a boy.
A semen analysis of the father showed abnormal sperm so the couple required IVF.
Out of 21 eggs collected, six were unused leaving 15 suitable for IVF.
A specific procedure was used, called intracytoplasmic sperm injection where a single sperm cell is inserted into the egg.
On day three of the process, 14 embryos were biopsied for gender selection.
The next day, a pre-implantation genetic report revealed four normal male embryos, three female and seven abnormal samples.
Day five of the treatment saw two male embryos transferred to the patient.
The woman recorded a positive pregnancy test two weeks later.
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
FROM%20THE%20ASHES
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COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
Company%20Profile
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PFA Premier League team of 2018-19
Allison (Liverpool)
Trent Alexander-Arnold (Liverpool)
Virgil van Dijk (Liverpool)
Aymeric Laporte (Manchester City)
Andrew Robertson (Liverpool)
Paul Pogba (Manchester United)
Fernandinho (Manchester City)
Bernardo Silva (Manchester City)
Raheem Sterling (Manchester City)
Sergio Aguero (Manchester City)
Sadio Mane (Liverpool)
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
U19 World Cup in South Africa
Group A: India, Japan, New Zealand, Sri Lanka
Group B: Australia, England, Nigeria, West Indies
Group C: Bangladesh, Pakistan, Scotland, Zimbabwe
Group D: Afghanistan, Canada, South Africa, UAE
UAE fixtures
Saturday, January 18, v Canada
Wednesday, January 22, v Afghanistan
Saturday, January 25, v South Africa
UAE squad
Aryan Lakra (captain), Vriitya Aravind, Deshan Chethyia, Mohammed Farazuddin, Jonathan Figy, Osama Hassan, Karthik Meiyappan, Rishabh Mukherjee, Ali Naseer, Wasi Shah, Alishan Sharafu, Sanchit Sharma, Kai Smith, Akasha Tahir, Ansh Tandon
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Results
Stage 7:
1. Caleb Ewan (AUS) Lotto Soudal - 3:18:29
2. Sam Bennett (IRL) Deceuninck-QuickStep - same time
3. Phil Bauhaus (GER) Bahrain Victorious
4. Michael Morkov (DEN) Deceuninck-QuickStep
5. Cees Bol (NED) Team DSM
General Classification:
1. Tadej Pogacar (SLO) UAE Team Emirates - 24:00:28
2. Adam Yates (GBR) Ineos Grenadiers - 0:00:35
3. Joao Almeida (POR) Deceuninck-QuickStep - 0:01:02
4. Chris Harper (AUS) Jumbo-Visma - 0:01:42
5. Neilson Powless (USA) EF Education-Nippo - 0:01:45
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Key changes
Commission caps
For life insurance products with a savings component, Peter Hodgins of Clyde & Co said different caps apply to the saving and protection elements:
• For the saving component, a cap of 4.5 per cent of the annualised premium per year (which may not exceed 90 per cent of the annualised premium over the policy term).
• On the protection component, there is a cap of 10 per cent of the annualised premium per year (which may not exceed 160 per cent of the annualised premium over the policy term).
• Indemnity commission, the amount of commission that can be advanced to a product salesperson, can be 50 per cent of the annualised premium for the first year or 50 per cent of the total commissions on the policy calculated.
• The remaining commission after deduction of the indemnity commission is paid equally over the premium payment term.
• For pure protection products, which only offer a life insurance component, the maximum commission will be 10 per cent of the annualised premium multiplied by the length of the policy in years.
Disclosure
Customers must now be provided with a full illustration of the product they are buying to ensure they understand the potential returns on savings products as well as the effects of any charges. There is also a “free-look” period of 30 days, where insurers must provide a full refund if the buyer wishes to cancel the policy.
“The illustration should provide for at least two scenarios to illustrate the performance of the product,” said Mr Hodgins. “All illustrations are required to be signed by the customer.”
Another illustration must outline surrender charges to ensure they understand the costs of exiting a fixed-term product early.
Illustrations must also be kept updatedand insurers must provide information on the top five investment funds available annually, including at least five years' performance data.
“This may be segregated based on the risk appetite of the customer (in which case, the top five funds for each segment must be provided),” said Mr Hodgins.
Product providers must also disclose the ratio of protection benefit to savings benefits. If a protection benefit ratio is less than 10 per cent "the product must carry a warning stating that it has limited or no protection benefit" Mr Hodgins added.
Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
Griselda
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Maestro
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The%20specs%20
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