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A&L, Paragon and B&B deny FSA is investigating their funding

Alliance & Leicester, Bradford & Bingley and Paragon have denied the FSA is leading an investigation into their solvency following Northern Rock’s funding crisis.

But a source close to the FSA says the regulator is worried by the situation and is asking all banks to prove their funding is secure.

A story on thisismoney.co.uk says that the FSA has challenged lenders to show they are secure but these claims have been rebuked by lenders.

Alliance & Leicester, Bradford & Bingley and Paragon have high loans-to-savings ratios and thisismoney named all three firms as a key focus of the rumoured FSA investigation.

Paragon Mortgages director mortgages John Heron says: “I am not aware of anything raised by the FSA to this effect and certainly would be if it were the case. I think this is scaremongering and is totally irresponsible. I can see absolutely no reason why we would have been named in this article.”

Alliance & Leicester spokesman Andy Homer: “I am not aware of this investigation. The banks’ stocks are down today. A lot of analysts have revised their forecasts for a couple of banks.”

A Bradford & Bingley spokeswoman says: “The FSA is not doing this in response to the situation with Northern Rock. It is continually reviewing the funding of every single bank.”

A statement released by B&B on Friday says: “We are well-funded having completed sizeable securitisation and covered bond transactions in May and June.”

FSA spokeswoman Vanessa Wood says: “We continue to monitor all firms in these conditions.”

British Banker’s Association director of retail PR Lesley McLeod says: “We are not expecting a domino effect. All that has happened in common with anyone that is looking at their accounts and thought they might be a bit short of cash and arranged a line of credit but they have not had to draw on this. They have plenty of money to meet their customers’ lending requirements to withdraw cash but they have made it clear that if their customers want to withdraw their cash they are open for them to do so.”

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