Northern Rock borrows £3bn in past week
Published September 22nd, 2007
Northern Rock has borrowed £3 billion from the Bank of England in the past week, it was confirmed yesterday.
The central bank revealed the extent of Northern Rock’s funding crisis in its weekly balance sheet, as the Newcastle-based mortgage bank insisted that it would press ahead with a dividend payment due next month.
The board must decide in the next few days whether to pay the £59 million interim dividend, a payment likely to draw criticism, given the size of the loans, funded by taxpayers, that it has borrowed from the Bank of England.
The Bank of England also disclosed yesterday how far it was watering down its collateral rules for banks that need emergency three-month funding, saying that, for security, it would accept mortgages even when the borrower was in arrears.
Announcing details of its offer of £10 billion of three-month loans to banks, the Bank said that mortgages for which the borrower was two months or less in arrears would be acceptable as security.
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