View more on these topics

Northern Rock to slash mortgage book by 60%

Northern Rock has revealed plans to offload 60 per cent of its mortgage book at it looks to break even by 2011.

The bank says it will encourage borrowers to remortgage elsewhere after their mortgage terms expire, with the aim of reducing its balance sheet from £107bn to around £50bn.

It will limit its share of gross new mortgage lending to no more than 2.5 per cent and discontinue unsecured and commercial lending.

Last week, Northern Rock revealed losses of £167.6m for 2007 and warned that it will be “significantly loss-making” this year.

The newly nationalised lender said it will repay its Bank of England debt, currently at £24bn, by the end of 2010.

The lender has committed to limiting its share of retail deposit balances to 1.5 per cent in the UK and 0.8 per cent in Ireland and says it will not rank in the top three of any best-buy savings tables this year.

This comes in response to industry concerns that it will be competing on an unfair basis due to its Government backing.

The bank says last year’s loss of £167.6m – a dramatic collapse from its 2006 profit of £626.7m – was due to exceptional costs related to its strategic review and impairments to treasury and other assets.

Total gross lending of £32.3bn last year was down slightly from £33bn in 2006 while total net lending of £12.2bn fell from £16.6bn in 2006.

The board forecasts that the bank will break even in 2011, followed by progressive profit improvement.

Executive chairman Ron Sandler says: “We have developed a business plan that we believe will help drive the bank back towards profit-ability and ensure that it has a sustainable future.”

Recommended

City whistleblowers set to get plea-bargain for share scares

The Chancellor looks set to give the FSA new powers to offer City whistleblowers lesser sentences or immunity from prosecution in return for evidence on market abuse.The Government has voiced its concerns about such a system in the past but Alistair Darling believes that after the recent destabilisation of HBOS’s share price the move is […]

NatWest International launches structured deposit account

NatWest International is offering investors a guaranteed structured deposit account which provides protected capital and a diversified portfolio.The account, titled Autopilot, protects the initial capital payment provided money is deposited for a full five year term. Its portfolio comprises developing equity markets, emerging equity markets, property and gold. NatWest says the fund observes the price […]

Mortgages Plc to withdraw all fixed-rate products

Mortgages plc has announced it is withdrawing all of its fixed rate products in a move designed to control new business volumes.The company is also reducing its maximum LTVs on all products to 70 per cent and reducing the maximum loan size to £300K.It is also withdrawing all self-cert and right to buy criteria and […]

Bear necessities

As I enjoyed a couple of weeks R&R, far away from the problems of the credit crunch, the near collapse of Bear Stearns almost scuppered an article I had prepared in anticipation of my absence. The day was saved by satellite TV, the internet and an unusually understanding wife. I was grateful that I had bought her some jewellery on the flight to our destination.

Greece: the sideshow continues

Artemis managers James Foster, Mark Page and Laurent Millet comment on the Greek deal, describing it as “just another fudge” getting in the way of bigger developments in China, the UK and the US. To read the full article click here.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com