Finance

Introduction: The confidence crunch popularly known as credit crisis is a very alarming and threatening role in the banking and profession sector. Credit crunch is all more or less sudden shortage of funds and loan for the business. The recent pecuniary crisis occurs first because of the sudden failure to pay of subprime mortgage. These mortgage paradoxs were chiefly was in America, which led to a shortage of funds and it air all over the world. northerly Rock was the first who benefit by credit crunch in the UK. Like USA, UK mortgage market did not empower so much awful mortgage in the market. Even though mortgage loaning became much relaxed than past years, UK mortgage market have tacit more control than USA. But it caused a serious problem for northern rock. They had a very high percentage of defective loans, as well as they had the highest percentage of loan invested in the capital market. So when first the subprime mortgage crisis hit in the US, Northern rock no longer manage to burn funds or money from the capital market. By a sudden shortfall of the money Northern rock has to look at for emergency credit from Bank of England. When the bank asked for emergency credit its share falls radically by 35.

4%, and the investors of the company started to retire their money from the bank and the bank started to face the liquidity problem. Because of this Northern rock was taken into temporarily public ownership by the Government on 22nd February 2008 under the PLAN which was intentional by the Government to help UK taxpayers. All the UK banks started to face problem by the crisis. Halifax Bank of Scotland (HBOS) which owns Halifax struggled to fund its balance sheet. Similar to Northern rock they have the same strategy to fund its business by borrowing. But in the current situation the money market had frozen up, so they cannot raise money finished borrowing. As a result they have a solid liquidity problem and their share price fell 35% in 2007. Royal Bank of Scotland (RBS) also... If you want to get a full essay, order it on our website: Orderessay

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