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After providing a rarely offered loan facility to Northern Rock, which in turn caused savers to panic, with thousands queuing to withdraw their cash the Treasury was left with a crisis situation on Britain's high streets. The Chancellor of the Exchequer, Alistair Darling, was very keen to prevent the Northern Rock situation worsening and spilling over into the remainder of the British banking system so, as well as the loan facility offered by the Treasury, he was eventually forced to go one step further by guaranteeing the savings of Northern Rock investors who already had accounts open on the 19th of September.
This appeared to do the trick and the queues outside Northern Rock branches quickly subsided. Northern Rock's own worries were not over though as the company, which provides loans and mortgages, in addition to savings accounts, saw it's share price drop by around 75%, wiping billions of the company's valuation.
The Treasury's arrangements for Northern Rock were agreed after discussions with the Governor of the Bank of England and the Chairman of the Financial Services Authority.
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