View more on these topics

Bank may have spent £3bn on Rock prop

The Bank of England may have supported Northern Rock to the value of £2.9bn through its lender of last-resort facility, according to New Star economist Simon Ward.

He says the Bank of England’s weekly balance sheets give an insight into the support offered to the bank.

Ward points out that the BoE’s balance sheet has expanded by 13 per cent in the last week as a result of its intervention to stabilise the banking system.

The BoE’s weekly bank return shows that total assets stood at £95bn on September 19, a rise of £11.3bn from the week before. Ward says: “£8.4bn of this increase represented stepped-up operations to supply market liquidity. The remaining £2.9bn occurred in the ‘other assets’ category and may represent the bank’s lender of last-resort support to Northern Rock.”

He says the Bank of England’s latest annual report shows its equity shareholders’ funds stood at £1.9bn in February.

John Charcol senior technical manager Ray Boulger says: “This figure does not seem an unreasonable amount, considering the number of withdrawals, although it is very hard to be exact about these things.

“The support is likely to have happened on Monday, as Northern Rock said on the Friday that it had not used the facility and by Monday it would have suffered more from weekend and postal withdrawals.”

Northern Rock’s shares are continuing to see frantic trading activity. Hedge fund RAB Capital last week bought a 6 per cent stake in the bank. Retail investors have also been snapping up shares.

Stockbroker The Share Centre says it has seen a 591 per cent increase in new accounts being opened last week compared with the previous week and says 34 per cent of all trades through its website were Northern Rock shares last Wednesday.

The Bank of England refuses to comment on Ward’s figures.

Recommended

Multi mangled

Britain’s most popular multi-manager is failing to shine on performance

Loanoptions.co.uk highlights danger of limited lender panels

Loanoptions.co.uk has highlighted the danger of dealing with secured loan packagers with limited lender panels.This comes after both SPPL and Kensington have temporarily pulled out of the secured loans market.Managing director Andy Moody says: “While it is a shame to see any lender exit the market, intermediaries need to look carefully at whether their current […]

Infinity Mortgages to return to the sub-prime market tomorrow

Infinity Mortgages have confirmed it will be returning to the lending market tomorrow after it temporarily withdrew from the sub-prime market at the beginning of August.The lender has confirmed it has retained Investec as the provider of its funding line and says that it will have details of the new product range live on its […]

Mortgages Plc to withdraw adverse buy-to-let products

Merril Lynch subsidiary Mortgages plc has announced it will be pulling all of its adverse buy-to-let products from October 2.The lender, which has made numerous criteria changes over the last two months, recently announced it was suspending all heavy and unlimited adverse business.Mortgages plc has also reduced maximum LTVs on self cert products from 85 […]

InFocus - thumbnail

In Focus — February 2015

Jelf Employee Benefits looks at the issue of paying anaesthetist fees when the patient had no chance to discuss or agree to them prior to care; and provides recommendations for avoiding this scenario.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment