August 2007, was a black day in the history of U.K, when it experienced its first major bank-run since Overend and Gurney in 1866. Around £ 3 billion of deposits were withdrawn in three days, almost 11% of the bank’s total retail deposit, from Northern Rock bank. The long queues outside the bank testified to the serious problems. It was for the first time during this problem that the Bank of England had operated its new money market regime in acute financial distress and acted as a lender of last resort for many years. The problem was widened when the bank sought liquidity assistance from the Bank of England despite being declared solvent by the regulatory authorities. Depositors were confused and equally scared on losing their life long savings. The much speculated U.S subprime mortgage crisis added the icing on the cake and worsened the situation when it became absolutely difficult for the bank to accumulate further funds from the market, because the global financial crisis had hit the market so badly that the investors and lenders had folded their hands. No one was in a mood of risking their stakes.
The crisis that hit the Northern Rock was a predictable one. Over a year, Bank of England and Financial Services Authority (FSA), had been warning about the evolving trends in the market: sharp asset growth, systemic under-pricing of risk, and some warning signals were given that some of the risk-shifting characteristics of new financial instruments (most especially credit derivatives such as Collateralised Debt Obligations and Credit Default Swaps) might not be as water-tight as they might seem. There were also warnings that the bank’s strategy of relying heavily on wholesale market funding made it particularly susceptible to liquidity risks.
Secondly, there were certain institutional weaknesses in the UK’s regulatory regime that made it susceptible to problems such as those that arose with Northern Rock:
1. A fundamental flaw in the deposit protection scheme,
2. No established special bankruptcy regime for banks,
3. No well-established or predictable Resolution regime for handling troubled banks, and
4. An institutional structure of financial supervision that separated responsibility for systemic stability and lender-of-last-resort (in the Bank of England) from prudential supervision of individual banks (located within the Financial Services Authority). This was always likely to be potentially hazardous in crisis conditions.
Northern Rock which was previously a mutual building society was converted to bank status in 1997. On conversion, it acquired legal powers to conduct the full range of banking business. Though, it opted to remain focussed predominantly on the residential mortgage market. From the outset, it adopted a securitisation and funding strategy which was based on secured wholesale money (by issuing mortgage-backed securities) and other capital market funding. At its peak, Northern Rock had assets of over £ 100 billion and a growth rate of around 20 % for over a decade. By the first half of 2007 its new mortgage lending accounted for around one-quarter of the total in the UK. The pace of mortgage lending exceeded the growth of retail deposits and the funding was met through securitisation and wholesale market funding.
The two problems which emerged were the lack of confidence in mortgage bank securities with the developments in the sub-prime mortgage market in US and the viability of the business model of Northern Rock. The bank was forced to seek financial assistance despite being assured of being solvent by the regulating authorities. The mere announcement sparked a run on the bank until the government offered a guarantee to all deposits without any restriction to normal limit of the Financial Services Compensation Scheme.
The researcher in her research work has laid down the multi-dimensional case study of Northern Rock and has delved into the various factors which lead to the crisis and has briefed in detail the revival strategies and further reformatory measures which could protect the country from any further financial crisis.
BACKGROUND OF NORTHERN ROCK
§ Emergence and Functioning of Northern Rock
Northern rock plc. a former building society is regarded as one of the United Kingdom’s largest retail banks and the largest financial institution in the Northeast home base region. The Northern Rock Building Society on being converted to publicly listed retail bank became one of the last of the United Kingdom’s largest building societies to do so.
The initial building society movement started in the late 18th century, whose growth coincided with the growth of the British Industrial Revolution. With increasing industrialization, there was a growing need for new initiatives to house the working class of swelling ranks. Previously, the building societies used to be formed chiefly by a group of artisans, by grouping their resources together in order to purchase their lands and build homes, such societies were known as “terminating societies”, since once the homes were built for all the members of a group- such society was discontinued. With the new class of people acquiring jobs in the wake up industrialization, the need was to embrace the new population. The building society had a new class of workmen to look after, who were less affluent then the artisan class. It was during the mid- 19th century that the “modern building society” evolved to serve the working class as direct home builder, resembling a bank, keeping the savings of a considerably larger group of people and providing housing loans, which were supposed to be repaid. The housing societies had therefore, expanded beyond mere lending, but had also started offering secured saving facilities and offering interests on the savings.
This new breed of building society was touted to be permanent fixture in the British economy. By the end of the 19th century around 1,700 such building societies were in operation, and, by the end of the twentieth century it was just 80 societies. In 1990s, nearly a handful of these had chosen to convert their status to that of publicly listed banking institutions.
In the 1860s two enduring societies were established, The Northern Counties Permanent Building Society (1860) and Rock Building Society (1865), exclusively serving north-eastern membership. These building societies prospered during the later decades of the century, when the Building Society Act, 1874 gave the building society a legal stature. These building societies functioned multi dimensionally, providing mortgages to industrial workforce who was basically underpaid and close to poverty; it acted as a cooperative endeavour fitting perfectly into the beginnings of the union movements and the call for democracy in the British government. During massive economic fluctuations, the building societies protected its members and it was in 1997 when it went public that the building societies commitment proved even stronger than the building society itself. After going public, Northern Rock created the charitable Northern Rock Foundation serving the social needs of the base and continued a policy of avoiding the repossession of its mortgage-holders’ home for those falling into arrears because of economic issues.
By the 20th century, more and more building societies had started merging, strengthening the British economic landscape. It was in 1965, that the Northern Counties Permanent Building Society and Rock Building Society joined the movement toward industry consolidation, to compete against the United Kingdom’s banks and other lending institutions, thus, merging to form the Northern Rock Building Society. Though small by national standards, the new Northern Rock took a position as the leading financial institution of the northeast region, offering beyond its concentration on home mortgages, a variety of savings and other traditional products. After going public, in no less than two years it changed its business strategy from a traditional thrift and mortgage lender which “originated and held” mortgages to one that relied upon mortgage origination, servicing and re-packaging through securitisation.
The growth of Northern Rock was exponential, the assets doubling to $32 million in 2007 from $16 million in 2005. Moreover, its market share had tripled from 6% to 19% between 1999 and 2007. The Northern Rock had diversified funding in domestic as well as foreign capital markets. The bank at the same time had increased both its capital leverage and dependence upon short term wholesale funding as a part of its mortgage warehousing process until the individual mortgages could be packaged and sold out. They have been pursuing the popular “originate and distribute” business model. What they did was they initially originated mortgage loans, then securitized and sold most of them to the parties collecting fees for these services. Until sale, they funded the warehousing of long term mortgage assets with short term liabilities obtained from the wholesale market primarily. Once the interest rates began to rise and mortgage market started to weaken, it was subject to significant market chatter of deteriorating financial condition.
GENESIS OF THE PROBLEM
§ Rise and Fall of Northern Rock
Since its demutualization in 1997, Northern Rock had witnessed a fast growth and particularly in 2001 it was promoted to the FTSE100 index (being one of the only two companies based in North East England to be member of such an elite). Even after the demutualisation the bank had retained its feature i.e. the absolute specialisation in the mortgage business: almost 90% of its assets being the residential mortgages. The bank’s consolidated balance sheet had grown more than six fold from 1997 until the end of 2006, asset value reaching £101 billion.
In 1997, during the demutualization, Northern Rock set up the Northern Rock Foundation, which received 5% of its pre-tax profits. The Foundation was set up with a meaningful purpose, as to when Northern Rock be taken over, it would have 15% of the share capital. Northern Rock described itself as a “specialised lender, whose core business is the provision of UK residential mortgages funded in retail as well as wholesale markets.” By the end of 2006, 89.2% of the assets of Northern Rock were residential mortgages. 
In order to achieve an exponential growth, Northern Rock changed its liabilities structure and adopted an “originate-to-distribute” model of funding. Through this model it began to borrow money from the wholesale markets, parcelled the mortgages and used them as collateral for further funds, through “securitisation”. Granite was their new securitisation vehicle. The FSA (Financial Services Authority) also stated that the entity was functioning normally. As much as 75% of the bank’s funding came from short-term borrowing, through the issuance of asset-backed securities, in the first half of 2007. Eventually, the interbank interest rate rose for Northern Rock’s lending and the share price fell considerably very low at that moment. This evidently showed the signals that the market gave for the risks that the bank had willing undertaken.
In the first half of 2007, Northern Rock had expanded its mortgage lending facilities, with a net increase of £10.7 billion. Furthermore, the American sub-prime mortgage market caused a global shock to the financial system, which led to the bank's funding resources to freeze simultaneously and thus slowing down its rate of growth. Bank of England had by then identified that the increasing wholesale funding stood as a potential risk if the markets became less liquid and the test scenarios of Northern Rock were not assuring to the FSA. There was an increase in the interim dividend of 30.3% and the company started to obtain retail funding from Denmark also, thus, increasing its liquidity.
The biggest hit to Northern Rock came in August, 2007, when a dislocation of fund started to take place due to the global financial shock with the US subprime mortgage market at its centre. The bank had not foreseen such a thing happening, with all the funding market closing down simultaneously and its belief of maintaining liquidity through high-quality assets and transparency demolished with the crisis. Northern Rock somehow managed to find funding for two or three months of liquidity, until it fell into retail run, reducing its liquidity. Northern Rock became reliant on exceptional, state-backed financing which lead to emergence of a situation wherein the necessity of Bank of England funding Northern Rock became evident.
Rock was badly hit by the liquidity crisis and the mortgage securitisation was virtually left paralysed. Thus, Northern Rock’s business was in serious trouble. Finally, in September, 2007, the bank sought liquidity support from the Bank of England, to replace funds which it was unable to raise from the money market and it received the same. This led to speculation amongst the individual depositors, who feared that their savings might not be available should Northern Rock go into receivership. The ultimate result was a bank run- the UK’s first in 150 years- where depositors lined up outside the bank to withdraw their savings as early as possible. Northern Rock’s cash was no longer readily available and it required the Bank of England to bail it out immediately and secure the trust of its customers.
The crisis which hit Northern Rock wasn’t primarily because of the US sub-prime mortgage crisis, nor was it a consequence of over-lending, quality of mortgages, standard of Northern Rock’s credit checks on its borrowers or the inherent culture of taking inordinate levels of credit. Much of the crisis was due to the flawed business model and the reckless approach to borrowing from the money market, which made Northern Rock suffer worst then the worldwide financial crunch. The victim was the taxpayers; bank’s employees; and the small shareholders who had invested their life savings in the bank. Any solution for the bank certainly should be assuring the best interest of the taxpayer.
The financial market was no longer in a position to withstand the impact of the demand for cheap and easy credit from consumers, borrowers, investors and financial institutions alike. Moreover, the legal framework was also inadequate in dealing with failing banks, especially with respect to the depositor protection scheme. Not only were the directors, but also the audit committees, lawyers, FSA, analysts, Bank of England, etc. the key players in the crisis.
§ Revival Strategies
Northern Rock and the tripartite authorities, i.e. the Bank of England, FSA and the Chancellor of the Exchequer, pursued a three-fold strategy and several options were considered for protecting the bank from the difficulties.
· Until being abandoned, the liquidity crisis was resolved through its own actions in short-term money markets and by securitisation of its debt.
· There was a vigorous search for a “safe haven”, obtaining a takeover by a major retail bank, where only two such banks showed interest but gradually no offer was made. There was a conflict over the details of the support facility requested by the potential bidders, inhibiting the option.
· A possibility of receiving support from the Bank of England guaranteed by the government.
· Taking advantage of its collateral requirements, there was a possibility for Northern Rock to access European Central Bank (ECB) funding, which was more generous than that of Bank of England and its willingness to adjust the timing of its credit supply. But, due to the length of time consumed in the required set up of legal process to provide collateral through the Irish branch, Northern Rock choose this option.
· Another solution preferred was: a covert operation, which was abandoned on September, since there was a need to make an announcement to the stock market about their situation and also there were practical possibilities of a leak covert operation.
The government was left out with options of subsidised sale to the private sector, putting the lender into administration or nationalisation. The potential bidders had some negotiations and ultimately the government couldn’t actually settle up on that. The left out option were administration and nationalisation. But, administration appeared impossible without causing chaos for Northern Rock’s retail depositors if deposits were frozen, despite the Treasury's guarantees. An independent value could have estimated what cash flows Northern Rock might produce in the future, but any number would have been arbitrary. Given that most of the remaining value of the equity had been the government’s own loans and guarantees, the Treasury faced the comical prospect of paying up for its own financial support.
The only left over option was nationalisation, which meant government taking over the charge, which would attract opposition. If the government continued to provide state aid to Northern Rock beyond the 17 March deadline, it would also require prior approval from the European Commission in order to continue providing state aid in accordance with the EC six months rule. This would create a potential disagreement between the government and EC over rules banning state subsidies, with the government facing criticism for disregarding the rights of shareholders. This issue was addressed in several meetings and the bank was provided a continuous help from the Bank of England. It was in the beginning of 2008 that the bank remained solvent was sustained by public money under private ownership. The commercial reality was pretty clear that the decisions about future of Northern Rock were to be taken by the government. 
A MULTIDIMENSIONAL PROBLEM
The Northern Rock episode is a multi-dimensional problem, where several issues relating to financial regulation and supervision came together hand in hand, revealing the fault lines in each dimension. Few identified dimensions include:
1. The low-probability-high-impact (LPHI) risk:
Northern Rock had a particular business model that exposed it to a low-probability risk (that liquidity would dry-up in the inter-bank and commercial paper market) but one that would have a high-impact (inability to continue to fund its business operations). This business model was not sufficiently monitored by the supervisory authority and the model proved to be viable for several years as short-term funding could be rolled-over on normal terms. However, the overall LPHI risk in this strategy was a combination of three micro risks:
(a) The bank or its conduits would be unable to roll-over maturing funding,
(b) The cost of such funding would rise relative to the yield on mortgage loans that it kept on the balance sheet, and
(c) That it would be unable to securitize those mortgage assets that it intended to.
In the last case, the bank would be forced to maintain the assets on the balance sheet and seek non-securitisation funding. The LPHI risk was, that it would be either unable to roll-over its short-term funding in the event of a serious liquidity squeeze or that the necessary roll-over funding could be secured only at high interest rates. In the event, all three major wholesale funding markets for Northern Rock collapsed and became effectively closed to it.
2. Incomplete credit risk shifting:
In a few years, various new instruments had developed to enable banks to shift credit risk off their balance sheet and on to others. However, in the financial market turmoil of 2007, it became apparent that the risk-shifting characteristics of these instruments were less than complete (Llewellyn (2009b)). Allegedly bankruptcy-remote vehicles (Special Purpose Vehicles, Conduits, etc.) seemed not to protect securitising banks from the credit risk of securitized assets. This was partly because banks became concerned about the reputation risk associated with allowing such vehicles to default. Furthermore, the potential liquidity problems attached to such vehicles were under-estimated or not considered at all.
3. Deposit Protection:
Major fault-lines were revealed in the British deposit protection scheme which is part of the Financial Services Compensation Scheme (FSCS). The co-insurance principle (whereby protection was less than complete: at the time, only the first £ 2000 of a deposit was fully protected and then only 90 % of the value of deposits up to a limit of £ 33,000) meant that the FSCS would not prevent what it was designed to prevent, namely the withdrawal of deposits when doubts emerged about the safety of a particular bank. This proved to be the central fault line in the system.
4. Structural weaknesses:
UK suffered from two other major structural weaknesses:
(i) It was almost alone amongst G7 countries in not having a special bank insolvency regime, and
(ii) There was no clearly-defined ex ante Resolution model in the case of failing banks.
A problem with the latter is that uncertainty is created, and in the event that bids are invited to “rescue” a failed bank, potential bidders are prone to bid for economic rents against the interests of the tax-payer. This became evident in the case of Northern Rock and the drawn-out procedure the government instigated which eventually led to the rejection of all the bids that were made and the temporary nationalisation of the bank.
5. Institutional structure of supervision:
In 1997, the in-coming Labour government announced a major overhaul of the institutional arrangements for financial regulation and supervision. Since the 2000 Financial Services and Markets Act, the UK has adopted a unified supervisory model (Llewellyn (2004)). In particular, the supervision of banks was taken away from the Bank of England and all regulation and supervision of financial institutions and markets was vested in the newly-created Financial Services Authority. Analysts argued that this will prove to be problematic in times of crisis as, while responsibility for systemic stability and the provision of market liquidity remained with the Bank of England, it was no longer to be responsible for supervising the institutions that made up the system. Although a crisis management structure was put in place (the Tripartite Committee), this clearly did not work well in the first crisis to emerge in the new regime.
6. The Stigma effect:
As the crisis unfolded, it became evident that banks were reluctant to seek liquidity support from the Bank of England because of a fear that this would be interpreted as a bank being in trouble. It was evidently the case that banks could not rely on any such assistance being kept confidential. This Stigma Effect undermined the role of the Bank of England in the performance of one of its basic functions to provide liquidity to the system.
7. Solvency vs. Liquidity:
The major concern which arises in this case is that did the Northern Rock go insolvent or was there an illiquidity of cash? Such a distinction is conventionally made between the solvency and liquidity of a bank but is difficult to make in practice than in theory.
A liquidity crisis is said to have occurred when a bank has a temporary cash flow problem. Its assets are greater than its debts, but some assets are illiquid (e.g. it takes a long time to sell a house. A bank can’t suddenly demand a mortgage loan back) Therefore although in theory assets are greater than debts, it can’t meet its current payment requirements. Whereas, a solvency crisis occurs when a bank has debts that it cannot meet through its assets. I.e. even if it could sell all its assets, it would still be unable to repay its debts. To be insolvent is much more serious because even if you have access to temporary funds it can’t solve the underlying problem of excess debts.
Northern Rock remained legally solvent and yet was dependent on Bank of England funding because it could not fund its operations in the markets. However, there is a question about this concept of solvency when applied to a bank which:
(1) has serious funding problems in the open market,
(2) Where the cost of funding exceeds the average rate of interest on the bank’s assets, and
(3) When it is dependent on support from the Bank of England.
The distinction between illiquidity and insolvency is, therefore, not always clear cut and, under some circumstances, illiquidity can force a solvent institution to become insolvent. Furthermore, if depositors know that the bank is illiquid they may be induced to withdraw deposits, which, in turn, force the bank to sell assets at a discount in order to pay out depositors. Given that banks operate with a relatively low equity capital ratio, the fire-sale discount does not need to be very large to exhaust the bank’s capital and force it into legal insolvency. It is also argued that Northern Bank had investments, assets and cash as well as future income from loans and mortgages, showing that they weren’t and cannot be regarded as insolvent but were facing a problem with free flow of liquid cash, i.e. illiquidity of cash.
NATIONALISATION OF BANKAfter much deliberation, it was on 17th February 2008, that the fate of the stricken bank and the efforts to find a private buyer was put to an end after six months and the government brought Northern Rock into public ownership. Nationalisation was regarded as a ‘temporary measure’: Chancellor Alistair Darling. A future sale to a private entity was kept open. This was one of the biggest nationalisations in UK which amounted to an ad hoc Bridge Bank mechanism. An independent commission was to determine the appropriate price to be paid to the shareholders, which was expected to be made on the basis of exclusion of valuation effect of government guarantees and support of the Bank of England. Therefore, even if the bank’s assets might have considerable value, the value of equity could be effectively zero, given that the bank could survive only on the basis of the government guarantee of deposits and funding from the Bank of England.
The government ruled out two rescue bids put forward by Virgin and the banks in-house
Management team because they would not provide best value for money for the British taxpayer. It was insisted that the decision would protect the banking sector and the public would gain over the long term if the government held on to Northern Rock until market conditions improved. Once the value of Northern Rock grows, the taxpayer will gain from any commercial return resulting from a future private sector buyout. Market conditions being volatile and uncertain, the demand to buy a mortgage bank was limited. Moreover, there were speculations that the housing market was becoming weaker and the probability that the prices would fall sharply indicated that some mortgagees would default on their loans.
The condition of repayment within a stipulated period of time was another problem for the potential bidders. There was also public disquiet in that the very small number of bidders were tending to make low bids which meant that tax-payers retained the risk that their own loans would not be repaid.
Though, the nationalisation was criticised by many and it was said that the outcome was that it would harm the Britain’s reputation for financial services and was regarded as the desperate attempt to minimise the political fallout. Rival banks were concerned about their own status.
It was on 23 February 2009, Northern Rock announced the offering of £14 billion worth new mortgages, for the next two years as a part of their new business plan. By the beginning of 2010, the bank was split into two parts, assets and banking, respectively. In mid of 2011, it was announced that the bank was to be sold to a single buyer in the private sector, by the end of the year. It was in March, 2011 that the bank issued its first mortgage securitisation since 2007 recession. On 17 November 2011 an announcement was made that Virgin Money were going to buy Northern Rock plc. for £747 million. The sale was completed on 1 January 2012 and by July a further £73 million deferred consideration was paid by Virgin. In 2014 Virgin Money repaid a further £154.5 million that it had received as part of the refinancing package.
What happened in the end was nothing but Northern Rock was saved and revived but down the line no one emerged well from the entire story. Northern Rock had pushed its business model beyond limit, expecting liquidity throughout, which was hazardous guess. The FSA giving a thumb up and unable to spot the danger was a surprise. It had acknowledged to the fact that its supervision of Northern Rock in the first half of 2007 was not sufficient to challenge the company’s board and executives on their risk management practices and their understanding of the risks posed by their model of business. The problem which basically affected Northern Rock was that of liquidity and funding, but, FSA’s concern were focussed on capital adequacy and solvency issues, rather than on liquidity issues, allowing the company to weaken its balance sheet was its greatest mistake.
On the other hand, the Bank of England was over worried about forgiving over risky behaviour and too little about the stressed financial system. It took no measures in order to protect Northern Rock against moral hazard. The Bank of England being the central bank should have responded proactively to the liquidity crisis instead it took a considerably long time in extending its help and at a later stage it took a measured cautious approach.
Of the many, the tripartite system, including the Bank of England, FSA and the Chancellor of the Exchequer were the biggest failure. They were unable to manage the run over on Northern Rock, there ways were complicated, neither there was a proper communication and the decision making was highly ineffectual, all of which lead to a filthy mismanagement, which had turned a difficult situation into a national crisis.
The proposed option of a covert support operation should have been considered in due time and the tripartite authorities and Northern Rock should have pushed and announced the support operation within hours rather than delaying it for days together. Such delay prolonged the run on Northern Rock’s deposits and damaged the bank. The Tripartite communication strategy with the market as well as the public in handling the crisis was weak. The legislative framework was then on its way, referring that an effective legislative framework was required.
UK’s system of dealing with bank insolvency was regarded as ‘inferior’ and ‘inadequate’. A need of serious reform of deposit insurance was required and certain recommendations were made with respect to the same. The reforms which were discussed included:
1. A single intervening authority should be responsible and given such powers for exclusively dealing with failing banks, but this should not be done by the FSA.
2. The Bank of England needs a review over the money operations with other banks and the tripartite authorities.
3. The banks and building societies should be covered by a deposit insurance scheme, so that the government would not require to intervene.
4. A legal framework ensuring protection to the depositors is a must. Moreover, a prompt approach is required to be taken by the relevant authorities in identifying the bank situation and lessen the wider impact of its difficulty.
5. The legislation should envision and clearly set out the changes in protecting the shareholders interest, in the event of a bank failure should be endowed with the decision making powers held by the shareholders.
6. Reform of the management structure of the BoE7 is required to ensure that proper weight is given to the increased responsibilities within the management structure, while also maintaining the appropriate priority for the conduct of monetary policy. Powers to seize and protect depositors’ cash when a bank gets into serious difficulty, and then to oversee its recovery is also suggested.
The utmost need is to restore the capital adequacy rules and a uniform regulatory approach is a must. With thinner lines of competition in the market worldwide, it would not be viable to witness such crisis again, instead a new reformatory measure should effectively ensure that the core aspects of insurance is covered and the default regulatory mechanism is corrected so as to avoid such a situation in the future.
 David T. Llewellyn, THE NORTHERN ROCK CRISIS: A MULTI-DIMENSIONAL PROBLEM, available at <www.suerf.org/download/studies/study20091.pdf>accessed on 30/01/2022.
 Rosa M. Lastra, Northern Rock, UK bank insolvency and cross-border bank insolvency, Journal of Banking Regulation (2008) 9, 165–186.
 Supra note1. p.14
 Supra note 4.
 Northern Rock plc History, International Directory of Company Histories, Vol. 33. St. James Press, 2000
 Northern Rock plc History <http://www.fundinguniverse.com/company-histories/northern-rock-plc-history/> accessed on:30/01/2022.
 Robert A. Eisenbeis1 and George G. Kaufman, LESSONS FROM THE DEMISE OF THE UK’S NORTHERN ROCK AND THE U.S.’S COUNTRYWIDE AND INDYMAC, p 75, available at www.suerf.org/download/studies/study20091.pd accessed on 30/01/2022.
 Vitaly M. Bord and João A. C. Santos, The Rise of the Originate to-Distribute Model and the Role of Banks in Financial Intermediation , available at http://www.newyorkfed.org/research/epr/12v18n2/1207bord.pdf accessed on 30/01/2022.
 Supra note 10. P.75
 Marco Onado, NORTHERN ROCK: JUST THE TIP OF THE ICEBERG, p.101, available at www.suerf.org/download/studies/study20091.pd accessed on 30/01/2022.
 Maria-Cristina UNGUREANU, Vasile COCRIS, NORTHERN ROCK: THE CRISIS OF A UK MORTGAGE LENDER, available at http://anale.feaa.uaic.ro/anale/resurse/018_F01_Ungureanu_Cocris.pdf accessed on 30/01/2022.
 Supra note 16
 Id. P155
 Supra note 16, p.156
 ANDRES CURIA MIRANDA, MORAL HAZARD AND HOW IT WAS INVOKED IN THE NORTHERN ROCK CRISIS OF 2007, available at http://heinonline.org/HOL/Page?handle=hein.journals/kinstul2&div=6&g_sent=1&collection=journals accessed on 30/01/2022.
 Id. P.37
 Supra note 16. P.156
 Id. P155
 Supra note 3. P144
 Supra note 24, p.155
 Supra note 27,p.157
 BBC News, "Northern Rock drops from FTSE 100". BBC News. 12 December 2007. Available at http://news.bbc.co.uk/2/hi/business/7139241.stm accessed on 30/01/2022.
 Ultimate Law Guide: Case Study: Northern Rock, available at http://www.ultimatelawguide.com/tl_files/ulg/downloads/commercial%20awareness/Ultimate%20Law%20Guide%20case%20study%20of%20Northern%20Rock.pdf accessed on 30/01/2022.
 Supra note 22, p37
 Supra note 28
 Supra note 30
 However, it must be noted that taking the bank into public hands would nonetheless be politically embarrassing for Mr Brown, who has been as keen as Tony Blair for Labour to shed its reputation as the party of state ownership. And it would probably mean breaking one of his self-imposed fiscal rules, as at least half the bank's liabilities would move onto the public books. But where Northern Rock is concerned, a dose of realism is long overdue.
 Supra note 33
 Supra note 1.p20-22
 Tejvan Pettinger, Difference between Liquidity Crisis and Solvency crisis, available at http://www.economicshelp.org/blog/5043/economics/difference-between-liquidity-crisis-and-solvency-crisis/ accessed on 30/01/2022.
 Supra note 16, p 158
 http://www.journallive.co.uk/north-east-news/breaking-news/2009/04/28/darling-promises-no-rushed-sale-on-northern-rock-61634-23496362/ accessed on 30/01/2022.
 Bank of England, SpecialResolution Regime (2009)
 2008 Annual Report and Accounts,. Northern Rock plc. 3 March 2009.
 Supra note1.p 27
 Even the Liberal Democrats, who supported the decision to nationalise Northern Rock, were critical of the timing, as it could have a destabilising impact on the market
 Northern Rock Returns to Mortgage Market ,Northern Rock. 23 February 2009.
 Treasury confirms 1 January restructuring of Northern Rock HM Treasury. 8 December 2009.
Virgin Money repays Treasury £150m it got in Northern Rock deal, The Telegraph. 25 July 2014.
 Supra note 15.p.160
 Infra,note 50
 Supra note 16, p.161