[entwisi]

The issue with Northern Rock as I understand it is down to their business mix. They are a heavy investor in mortgages, far greater percentage of their business is in this arena. They also (as all other banks do) play teh international markets buying and selling investments,debts, etc.

With teh advent of the american sub prime mortage scandal ( think lending shed loads of money to poor people then selling teh debts on as something else to other banks ) their cash flow isn't too heathly AT THIS MOMENT. as the sub prime stuff settles as it will their position will be back on track with just lower profits and a bit of hurt pride. What is more scary is that this was reported. this has now casued a situation where people who have savings with NR are all panicking and withdrawing their capital. Now it doesn't take a brain surgeon to realsie that NR (agaian as with all other Banks) cannot liquidate all capital investments back to investors in such a short period of time. The very action of people withdrawing their money could caused teh Bank to trade beyond its means. This would happen to every single bank across the world so its not NR's fault or being they are just falling victim once again of American financial mistradings.