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F&C’s Scott cools fears over Rock repeat

F&C UK growth and income manager Ted Scott has rubbished fears that others UK banks could collapse in the same fashion as Northern Rock.

Scott says that Northern Rock was an isolated case given its dependency on wholesale banking meant that that once the credit crisis took hold the banks funding vanished.

He says: “As a consequence, the bank did not have the balance sheet strength to support the enormous growth in mortgage lending, much of it at very thin margins and increasingly high loan to values, that it had financed over recent years whilst the housing market boomed.

“Indeed, in my view one of the main reasons for the excessive growth in the housing market was the reckless lending by the banks of which Northern Rock was the principal culprit.”

Scott says fears the Bank of England will have to mount a rescue operation to stop others following suit are nothing more than “mis-placed scaremongering”.

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