View more on these topics

BofE may have given £2.9bn support to Northern Rock, says New Star

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.

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

He says the BofE’s balance sheet has expanded by 13 per cent in the last week as a result of its intervention to stabilise the banking system.

On the BofE’s weekly Bank Return total assets stood at £95bn on September 19, a rise of £11.3bn from the week before.

He says: “£8.4 billion of this increase represented stepped-up operations to supply market liquidity. The remaining £2.9 billion occurred in the “other assets” category and may represent the Bank’s lender of last resort support to Northern Rock.

“According to the Bank’s latest Annual Report, its shareholders’ equity stood at £1.9 billion in February 2007.”

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 at a time like this to be exact about these things.

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

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


FSA hints at retention of WOM/independence link

The FSA has given another strong hint that independence will indeed mean whole of market rather than the radical suggestion in the retail distribution review that its meaning may be redefined.Speaking on a webcast on the Chartered Insurance Institute’s specialist RDR page, head of the RDR Amanda Bowe said she wanted to emphasise that it […]

DB Mortgages withdraws loans

DB Mortgages has withdrawn its higher arrangement fee near-prime +, near-prime and super-light products. The products will only be available on the company’s 0.5 per cent arrangement fee structure.


News and expert analysis straight to your inbox

Sign up


    Leave a comment