November 2, 2007 / 2:41 PM / 12 years ago

Northern Rock Bank debt may hit 25 bln

LONDON (Reuters) - Mortgage lender Northern Rock’s NRK.L chairman, Bryan Sanderson, believes its emergency borrowing from the Bank of England could reach 25 billion pounds by February, according to a newspaper report.

Shoppers pass a branch of Northern Rock in Kingston in London September 15, 2007. Northern Rock's chairman, Bryan Sanderson, believes its emergency borrowing from the Bank of England could reach 25 billion pounds by February, according to a newspaper report. REUTERS/Luke MacGregor

The Newcastle Journal posted an interview with Sanderson on its Web site in which he was quoted as saying: “The debt is not quite 20 billion pounds just yet but it’s getting there and it could be as much as 25 billion pounds by February”.

That would be lower than recent forecasts. Northern Rock was not immediately available for comment.

The paper said the interview was conducted on Thursday morning. On Thursday afternoon, figures from the Bank showed Northern Rock has now borrowed up to 22.8 billion pounds since being offered emergency funds on September 14.

The Bank has refused to comment on the amount. Northern Rock has said nothing since Sanderson’s predecessor, Matt Ridley, told a parliamentary committee on October 16 it had borrowed about 13 billion pounds, consistent with market forecasts based on Bank data the previous week.

Economist Simon Ward at fund manager New Star said on Thursday the latest estimate of 22.8 billion pounds meant the Northern Rock loans could approach 30 billion pounds — the amount the Bank said a suitor requested from it as a condition of a rescue bid the Newcastle-based bank.

The approach by the suitor, which sources familiar with the matter have named as Lloyds TSB (LLOY.L), failed after the central bank rejected the offer, forcing Northern Rock to seek emergency funding.

Sanderson also told the Newcastle Journal a takeover of Northern Rock without job losses “is not the most likely outcome... The answers to job losses depend on the offers. At the moment we are just not filling vacancies, which reduces the work force by 600 a year”.

The trade union Unite, which said it had previously had assurances from Northern Rock that compulsory redundancies will be avoided, said: “Vague comments such as those expressed by the chairman merely result in further insecurity for the employees of the bank, at a time when they are already under massive strain.

At 2 p.m., Northern Rock shares were down 1.0 percent at 170.3 pence, down 85 percent from its 2007 high and valuing the bank at about 725 million pounds.

“Was it (all) avoidable, I just don’t know. There does seem to have been a perfect storm. If a few little things had been different this might never have happened,” Sanderson told the paper.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below