Northern Rock returns to securitisation market

22 March 2011 12:39 pm | By Paul Thomas

State-backed bank Northern Rock plc is planning to enter the securitisation markets for the first time since receiving a Government bailout.

The bond issue will be from the “good” bank, Northern Rock plc. The lender was split in two in January 2010.

The lender says it is looking to securitise around 2 per cent of its £18.5bn balance sheet, which works out at around £350m to £400m.

The wholesale markets accounted for 75 per cent of the former businesses’ funding at the end of 2006, which it used to increase mortgage lending.

Currently, the “good” bank Northern Rock plc is 99 per cent funded by retail deposits.

The securitisation market has dried up since the credit crisis, with investors weary of investing in bonds backed by mortgage assets.

A spokesman says: “It is about diversifying the source and term of the funding base and looking for the most cost effective source of funding.”

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