Northern Rock

Abstract

If there is any country that has enjoyed a strong reputation and willpower in the field of finance, it is the UK. UK has enjoyed this position since the end of the 19th century. London has retained and is undoubtedly the leading financial centre in Europe. The banks in London and around the UK are among the most powerful financial institutions in the world. However the sub prime-lending crisis in the US, and the subsequent credit crunch that followed, shook the finance world at the grass root level. As globalization and its integration has had a grave impact in the financial sector, the troubles and difficulties in this obscure sub-sector of the American mortgage market has resulted in harmful effects on corporations all over the world. The overwhelming majority of banks and financial institutions including well known and allegedly upstanding institutions such as Citigroup and Merrill Lynch recorded sharp losses. These losses added more confusion and chaos in the markets. For a few companies, the consequences were even bitter. To quote an example, one of the consequences were reflected in Britain's Northern Rock, which was badly hit by a ?perfect storm', and had to grapple with a severe liquidity crisis.