STUNNING scenes of the run on Northern Rock bank last September are embedded in the nation's consciousness. We had all been aware at the time that we were seeing something unprecedented in everybody's lifetimes.
But yesterday's hard data (in every sense) from the bank that is now in temporary nationalisation as a result of its downfall lays bare just how the panic decimated its trading performance to the extent of inviability.
A loss of £167.6 million
in 2007 replaced a profit of £626.7m in 2006. The turmoil in financial markets that showed up Northern's business model as a dead man walking when the credit crunch bit therefore resulted in a negative trading turnaround at the bank of nearly £800m.
Rubbing in the pain, Northern now says it will also continue to make significant losses this year, and will be unlikely to break even before 2011.
The architect of that aggressive lending strategy based mainly on banks lending to each other rather than on Northern's retail deposits was the now-ousted Adam Applegarth. Some hubris, some nemesis.
As the Bank of England was memorably castigated by the Treasury committee for effectively crying "Fire" in a crowded cinema, Northern's customers voted with their feet – literally – as they queued around the block to withdraw their money.
Northern's results yesterday revealed that there was an outflow of £12.2 billion of its retail deposits in 2007, overwhelmingly skewed to the second half for obvious reasons.
That compared with an inflow of £2.5bn in 2006 when customers still felt the executives at the Newcastle-based bank were canny lads rather than "can't understand what's happening, lads".
As the panic became exponential, it was a similar picture on total net lending at Northern.
It collapsed to £12.2bn in 2007 from £16.6bn the year before, which was hardly surprising as you don't lend money for people to build homes in a hurricane.
Completing a picture of a trading meltdown, charges for bad customer loans at Northern leapt to nearly £240m last year, up from £81.2m in 2006.
Meanwhile home repossessions were caught in the tumbling domino effect, not far off quadrupling to 2,215 from 662 in 2006.
The Financial Services Authority, Britain's financial regulator, donned a hairshirt last week, admitting its oversight of Northern was woefully lacking.
It is difficult to know just how much of the above financial pain could have been avoided if the dangers of Northern's gun-slinging financial model had been jumped on earlier by the FSA.
The worry is a substantial proportion, and Northern's Christmas-tree decoration non-execs deserve criticism for being asleep at the wheel as well as the FSA.
Non-execs are there to challenge the business models put forward by testosterone-charged chief execs with an eye on share options. There was obviously not much challenging going on.
Apart from the bombed-out trading numbers, Northern, under new trouble-shooting boss Ron Sanders, moved swiftly yesterday to try and assuage fears of banking rivals that the group will have an unfair market advantage from having the government's backing.
It is clear the lobbying in the industry has been effective. Northern is sharply reining in its ambitions, saying it aims to reduce its balance sheet by half to £50bn by the end of 2011.
Its target redemption level for mortgages when current deals run out is 60 per cent.
Northern's share of retail deposits will be limited to 1.5 per cent in the UK and 0.8 per cent in Ireland, and it will not rank in the top three, by design, in any of the major retail savings products categories during 2008. It is an obvious sop to its rivals to call off the dogs in their quest to make sure Northern does not distort the market through its government imprimatur.
Further on the plus side, the bank says it has reduced the money it owes the Bank of England by £3bn to £24bn and expects to pay it all back by the end of 2010. Northern's downfall is obviously one of the most sobering stories in the history of Britain's financial industry even given the high level of the bar with the likes of Barings, BCCI, Crocker etc.
It looks a long road ahead, and it might be rocky, but yesterday might just be the beginnings of a line being drawn under the Northern debacle.
