Northern Rock PLC Essay Example | Topics and Well Written Essays - 1000 words

blue swing PLC - turn out ExampleIn this way the g either overnment, representing the taxpayers, may recoup its investment and the cashbox may be returned to the occult sector. A bank that shows consistent profit is attractive to potential buyers. To do this its financial strategy must(prenominal) continue its plans of further restructuring its business model. It must reduce its capital costs base by stop cost management. And while pursuing and adjusting to medium term growth, Northern persuade must focus on innovation and new securities industrys, and continue to build on transparent and open communication with its stake-holders. Discussion Today, chthonian Government ownership, Northern oscillate Plc has kept together some 70 branches over which it must wield a steady hand toward corporate profit in the interest of its stakeholders, the taxpayers, and its depositors. Since its black day of 17 September 2007, when depositors were shown on worldwide TV queuing in long l ines outside the bank to make their withdrawals, the bank has went through several stages of restructuring. The initial one was the takeover by the government. Throughout these restructuring processes, the bank has sought to construct a substantial market for its mortgage loans, a market that is different from the business plan that the bank had pursued before 2008. Previous to 2008 and after Northern Rock became public in 1997, the bank briefly embarked on a risky business plan that was coupled to a flawed bank regulative system. Since 1997 Northern Rock was regulated by the newly created Financial Services Authority (FSA). The FSA did not handle any information it had with the Treasury or with the Bank of England who was responsible for monetary policy. Both the FSA and the Bank of England were heavy to step in and stop Northern Rocks demise. The FSA had, in June 2007, instead allowed Northern Rock to decrease its amount of required on-hand capital. This action exemplified the regulatory system that allowed the bank to overextend itself in the forged mortgage derivative market. But even today the bank as a retail and nest egg bank must rebuild its image and processes in the same waters of financial risk. During the period of the default, Northern Rocks business plan was based on securitizing mortgages in the short-term wholesale market to support its long-term longs. It was packaging multiple mortgage loans and selling them as bonds to investors. This business model had depended on stability in the mortgage securities market and the confidence of those who traded in the debt packages. When the housing prices begin to show copious scale plummeting from speculated highs, lenders stopped extending rollover loans to Northern Rock and they eventually took their money from the bank. In dread 2007 credit froze up in the bank liquidity market and Northern Rock could no longer sell bonds over the face of a broad liquidity freeze. It could not make any new loa ns. On August 13, 2007, the bank requested emergency funding from the Bank of England. It was only after the Chancellor of the Exchequer guaranteed all deposits at the bank in later September did the resulting bank run stop. The present Northern Rock Plc was created from The Northern Rock Transfer Order which on 1 January 2010 restructured the bank into two banks, Northern Rock Plc, the savings bank with new mortgages, and the Northern Rock Asset Management Plc (NRAM) (NRP, 2011). The latter took over the noxious mortgage assets and is concentrating in mortgage loans. North Rock Plc began its