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Screensize: 640 x 480 800 x 600 1024 x 768 1280 x 1024 UserName: Password: Format Mode: Basic  Help  Prompt  Format: Font Andale Mono Arial Arial Black Book Antiqua Century Gothic Comic Sans MS Courier New Georgia Impact Lucida Console Script MT Bold Stencil Tahoma Times New Roman Trebuchet MS Verdana   Size 1 2 3 4 5 6   Color Black Red Yellow Pink Green Orange Purple Blue Beige Brown Teal Navy Maroon LimeGreen Message: * HTML is OFF * Forum Code is ON Smilies [quote][i]Originally posted by BankruptcyNews[/i] [br]Northern Rock shares plunge 21% Shares in one of the UK's largest mortgage lenders, Northern Rock, were down by 21% after the Bank of England decided to offer it emergency funding. But experts say it does not mean Northern Rock, which has £113bn in assets, is in danger of going bust. The bank has struggled to raise money to finance its lending ever since money markets seized up over the summer. Other bank shares fell, with those in Alliance & Leicester and Bradford & Bingley down by between 6% and 7%. Meanwhile those in HBOS and Barclays fell by roughly 3.5%. Northern Rock has also said that its profits for 2007 will be hit, but that it remains solvent. Its shares had fallen by as much as 24% on Friday before a slight late-morning rally. NORTHERN ROCK FACTS Founded in 1965 after merger of Northern Counties Permanent Building Society and Rock Building Society Became a public company in 1997 Has 18.9% of UK lending Loans and assets of £113bn Deposits from customers of £24bn Unlike most banks, which get their money from customers making deposits into savings accounts, Northern Rock is built around its mortgage business. It raises most of the money which it provides for mortgages by borrowing from banks and other financial institutions. Speaking on BBC Radio 4's Today programme, Chancellor Alistair Darling said: "The problem here is there is a lot of money in the system but they are reluctant to lend it to each other at the moment." Mr Darling said that "in order to create a stable banking system, the Bank [of England] steps in and it makes facilities available to the Northern Rock." "Northern Rock can draw on them when it requires, but it means it can carry on trading, people can use their accounts in the normal way, they carry on making their mortgage payments in the usual way, Northern Rock will be able to carry on its business." And Angela Knight, chief executive of the British Bankers' Association, also told the programme: "I think that anybody who is waking up this morning who is either a saver with Northern Rock or has got a mortgage... can be absolutely confident that they have got their money with or they have borrowed from a very sound financial institution." Despite the reassurances, there have been reports that long lines of customers have formed outside several Northern Rock branches around the UK. The emergency lending facility to Northern Rock was agreed by Mr Darling, on advice from Mervyn King, governor of the Bank of England. Northern Rock chief executive Adam Applegarth said that it had not yet borrowed any of the "unlimited" funds available. Mr Applegarth also urged customers to remain calm, and stressed that it was "business as normal". However he indicated that it may in future be more expensive worldwide for institutions to borrow money, and that in turn could mean that mortgages generally become more expensive. Meanwhile, BBC correspondent Declan Curry says that with Northern Rock' share price falling it could make it vulnerable to a takeover bid from one of its rivals. 'Lender of last resort' The decision for the Bank of England to become the "lender of last resort" is extremely rare - and also comes after consultation with the Financial Services Authority. It is an unlimited facility, with interest rated at a "penal rate" of more than 1% above Bank base rate. To obtain the money, the Northern Rock will have to deposit some of its customers' mortgages as collateral, which are regarded by the Bank of England as sound. In a statement, Northern Rock said it had "agreed with the Bank of England that it can raise such amounts of liquidity as may be necessary by either borrowing on a secured basis from the Bank of England or entering into repurchase facilities with the Bank of England". It added: "Such repurchase facilities would include securities that have prime residential mortgage assets as underlying collateral. "On the assumption that the current conditions remain until the end of 2007, there will clearly be an impact on Northern Rock's 2007 asset growth and, therefore, on profits." The bank also said that it was considered by the FSA to be "solvent". An FSA statement said Northern Rock "exceeds its regulatory capital requirement and has a good quality loan book". Source: bbc.co.uk See my Blogs: http://bankruptcynews.blogs.bankruptcyhelp.org.uk [/quote]   Check here to include your profile signature.