IT’S a crisp winter’s day in early 2012.

To be precise, it’s January 10, and as the people of the North-East are getting back into the old routine following the festive break, something new is stirring.

The Northern Echo: WORRYING TIMES: People queue at a former Northern Rock branch, in Darlington's High Row

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A queue of people wait outside Northern Rock's Darlington High Row branch in September 2007

The giveaway is Sir Richard Branson.

He’s leaning out of a window in a building on Newcastle’s Northumberland Street.

Bedecked in the black and white stripes of the city’s football club, he’s giving a double thumbs-up to the gathered photographers below.

Today is a big day. Sir Richard, and his Virgin Group venture, have finally got what they wanted.

When Northern Rock wilted in the years previously, Virgin was a frontrunner in the race to secure the bank before it was ultimately taken into public ownership.

Now, with Magpies’ footballers Mike Williamson, Sammy Ameobi and Davide Santon by his side, the situation was altogether different.

Sir Richard had attained his goal.

However, to paint the full picture of the business magnate’s typically colourful display, we need to go back even further and seek out another pictorial flashback, which this time highlights the troubles of yesteryear.

Streams of worried people stand in line outside Northern Rock branches.

On Darlington’s High Row, a number are captured waiting next to windows carrying hopelessly incongruous advertising boards that urge customers to ‘come inside and talk about your savings’. Their intention was very much on getting inside.

The Rock was crumbling.

It was September 14, 2007 and people were rushing to empty accounts after the Rock revealed it had agreed emergency funding from the Bank of England.

Its share price tumbled by more than 30 per cent in a single day.

It was the first run on a British bank in more than a century and damaged Britain's reputation as a world financial centre and a good place to do business.

But just what happened in that fateful period a decade ago?

To begin with, the UK stock market was somewhat sickly.

A period of volatility had seen banks stop lending to each other due to market fears over high-risk US mortgages.

The situation deteriorated on August 16, when the hunt for a potential buyer was launched after former Rock chairman Matt Ridley spoke to Bank of England governor Mervyn King about the possibility of a support operation.

Days later, Financial Services Authority chairman Sir Callum McCarthy wrote to then Chancellor Alistair Darling to indicate the Rock “was running into quite substantial problems”.

When, on Monday, September 10, the bank abandoned attempts to find a buyer, the writing was on the wall.

The Government gave the Rock time to find a white knight to lead its rescue, but ultimately had no choice but to take the beleaguered bank into public ownership.

Virgin Group and Olivant had entered the race to secure the bank, but, in early 2008, the Government announced a period of public ownership after neither proposal delivered "sufficient value for money to the taxpayer".

A significant number of jobs went, with the European Commission warning the bank had to “shrink” to remain afloat without state aid.

By July 2009, the Rock had begun offering mortgages to existing customers for the first time since late 2007, but it wasn’t long before further changes were on the way.

On New Year’s Day of 2010, as partygoers woke up with fuzzy heads from the night before, Northern Rock was officially separated into a savings and mortgage bank called Northern Rock Plc.

This was the “good” bank that would eventually be sold off into the private sector, with Northern Rock Asset Management, which at the time held £54.5bn of more toxic mortgages and unsecured personal loans, remaining in public ownership.

That "good" part was eventually sold to Virgin Money for £747m, with estimations put forward that the sale saw taxpayers hit with a "paper" loss of between £400m and £650m.

The sale went through on January 1, 2012.

The view from Virgin Money

The Northern Echo: SUCCESSES: Jayne-Anne Gadhia, Virgin Money chief executive. She is pictured in front of the former Northern Rock branch, on Newcastle's Northumberland Street

Jayne-Anne Gadhia, chief executive at the Newcastle-based operator, speaks to The Northern Echo about her memories of the time

“When the news broke showing the pictures of long queues of people outside Northern Rock branches, all wanting to take their money out, it was hard to see beyond the run itself”, she said.

“After all, this was the first run on a British bank for 140 years.

“A lasting memory from that time was seeing just how patient and present the staff were.

“Everyone who could help had pitched up to try to calm down the crisis.

“And that was my inspiration to understand if there was anything that we could do to help.

“We worked day and night for months to put together a package to help and I remember very clearly when I was told that Alistair Darling had announced they were going to nationalise the Rock.

“Fast forward to 2012, we ultimately prevailed and brought Virgin Money and Northern Rock together with the aim of creating a new and trusted force in UK banking; a force capable of rebuilding public confidence and trust in the banking industry.

“Since then Virgin Money has more than doubled mortgage balances by helping tens of thousands of people get onto and move up the housing ladder, and we have a thriving savings business – growing deposit balances from £16.2bn in 2012 to almost £30bn today.

“We have also created a high-quality, prime credit card business from scratch.

“Our success has been achieved through the dedication and hard work of our colleagues in the North-East and beyond.

“Their commitment has seen the business flourish over the past five years and we are proud of what we have achieved together.

“We look forward to continuing our journey to make banking better for everyone.”

The view from the Bank of England's Sir Jon Cunliffe:

"Ten years ago the financial crisis sent shockwaves through a global financial system built on weak foundations.

"Here in the UK, perhaps the most memorable symbol of that panic a decade ago this week was the queues of people that appeared outside branches of Northern Rock.

"The consequences of the crisis were huge. The global economy crashed, unemployment rose, and governments around the world used taxpayers’ money to save banks from failure in order to prevent a global depression.

"Here in the UK, we spent £133bn supporting banks in the crisis. Not to help the owners of the banks, but to make sure the banks kept providing the lending and the services on which you and I depend every day.

"A decade on there have been vast changes in the way we oversee banks and, as a result, in the way they operate.

"These changes aim to do three things:

"Firstly, to make banks manage the true risks they are taking.

"Certain risky practices and toxic forms of ‘shadow banking’ have simply been stopped. More generally banks now have to measure risk properly and report on the risks they are taking.

"And those who run our banks are now by law much more accountable for their behaviour. Bankers’ pay rules now discourage excessive risk-taking and bad conduct.

"Secondly, to ensure banks can withstand shocks.

"Banks do need to take risks. That is a necessary part of their business. Things will go wrong and banks will make losses on some of their activity.

"But we have made changes to ensure that, unlike ten years ago, when trouble does arise banks can absorb losses without failing and can continue to provide services to households and businesses in times of stress.

"Banks now also have to be less dependent on short-term borrowing which can be cut off suddenly. They are now required to have enough assets that can be sold more easily if they need to raise cash quickly.

"And last, if a bank does fail, to ensure that it can do so safely like other businesses in the economy.

"We cannot and should not try to ensure that no bank ever fails. But we should try to ensure that if and when that happens that bank, no matter how large, can be wound down safely.

"Of course, today we live in an economy that looks very different from a decade ago. It is not just about the banks.

"Businesses are less dependent on banks for finance. Large businesses can borrow in financial markets and many small businesses have turned to alternatives such as peer-to-peer lending and crowdfunding.

"Even the banking landscape is changing, with more competition from new entrants such as Durham’s Atom Bank, which I visited on a recent trip to the North-East.

"This diversification should also make the financial system more able to carry on providing credit in times of stress, and provide more choice to customers.

"As a result of these changes, the UK’s financial system is much stronger and more responsible.

"But we must not be complacent. We must finish the full implementation of the reforms and ensure that, as the memories of the financial crisis dim, standards are not allowed to slip back.

"At the Bank of England we keep a very close eye on our banks and the wider financial system.

"We are constantly scanning the landscape for any signs of trouble in the distance. We report regularly on the risks we see to the public and to Parliament so that we are fully accountable to those we serve.

"Our network of agents is a crucial part of this work, feeding us up-to-date intelligence from the financial sector and businesses large and small here in the North-East and around the UK.

"Over the last ten years we have built a more resilient financial system. Anniversaries like this are a useful reminder of why that is so important."


The Northern Echo: Video grab showing Northern Rock bosses (left to right) Senior Independent Director Sir Ian Gibson, Chairman Dr Matt Ridley, Chief Executive Adam Applegarth and Non-Executive Director Sir Derek Wanless, giving evidence to the House of Commons Treasury Com

Video grab showing Northern Rock bosses (left to right) Senior Independent Director Sir Ian Gibson, Chairman Dr Matt Ridley, Chief Executive Adam Applegarth and Non-Executive Director Sir Derek Wanless, giving evidence to the House of Commons Treasury Committee

September 13, 2007: It is revealed that Northern Rock was forced to apply to the Bank of England for emergency financial support after being caught up in the US sub-prime lending crisis.

September 14, 2007: Despite repeated assurances from The Bank of England that Northern Rock is financially sound, worried savers queue up around the bank’s 76 branches to withdraw savings and the share price plunges 30 per cent.

September 17, 2007: After £2.5bn is withdrawn from the North-East bank, Chancellor Alistair Darling steps in and guarantees all Northern Rock deposits in a bid to restore confidence in the beleaguered bank. The bank announces a freeze on recruitment.

September 18, 2007: The Government's tactics pay off as Northern Rock shares rally, the queues outside branches subside and savers begin to re-invest in the bank.

September 19, 2007: Northern Rock suffers another bruising day on the stock market, with shares falling 16 per cent amid rumours that the group has received a bargain basement takeover offer.

September 21, 2007: The Financial Times calculates Northern Rock was forced to borrow about £3bn from the Bank of England, as Chancellor Alistair Darling is called before a Parliamentary committee to explain the Treasury's handling of the crisis.

September 25, 2007: Northern Rock bows to pressure and scraps a dividend payment to shareholders, totalling £59m, it previously announced in July.

October 1, 2007: The Chancellor fully guarantees bank and building society savings up to £35,000 under new rules in a bid to prevent a repeat of Northern Rock, as shares in the bank plunge to an all-time low on the tenth anniversary of its stock market floatation.

October 16, 2007: Northern Rock executives appear before a Parliamentary committee into the crisis.

October 19, 2007: The resignation of Northern Rock's under fire chairman Matt Ridley is accepted. Former BP managing director Bryan Sanderson is announced as the replacement.

November 17, 2007: Chief executive Adam Applegarth resigns. Board directors David Baker, Keith Currie and Andy Kuipers stand down but remain as officers.

January 4, 2008: The Chancellor announces plans to give the Financial Services Authority greater powers to step in and prevent another Northern Rock situation by allowing them to seize and protect customers' cash if a bank gets into difficulty.

February 17, 2008: Announcement of Northern Rock being taken into public ownership.

March 26, 2008: The Financial Services Authority publishes an internal report into the crisis, admitting it had too few regulators checking Northern Rock too infrequently and classified the credit crunch bringing the banking system to a standstill as "low risk, high impact".

July 30, 2008: Northern Rock announces it is making 1,300 employees redundant.

July 5, 2009: Northern Rock begins offering mortgages to existing customers for the first time since late 2007.

January 1, 2010: Northern Rock is officially separated into a savings and mortgage bank called Northern Rock Plc and Northern Rock Asset Management.

November 17, 2011: The "good" part of Northern Rock is sold to Virgin Money for £747m. It is estimated the sale sees taxpayers with a "paper" loss of between £400m and £650m.

January 1, 2012: The sale to Virgin Money is completed, and Jayne-Anne Gadhia is appointed chief executive.