Big Banks shun Northern Rock rescue
Published September 23rd, 2007
Many of the biggest financial institutions in Britain and Europe have snubbed pleas to rescue ailing mortgage lender Northern Rock.
The Bank of England, the Financial Services Authority (FSA) and Northern Rock’s corporate adviser, Merrill Lynch, have spent the past two weeks trying to find a white knight to take control of the former building society.
But rival banks say a rescue is too risky and those who have seen Northern Rock’s books say it would take weeks to examine its figures and find a way to plug the hole in its finances.
They also say it would require too much capital to take on the £100 billion-plus mortgage book. Some analysts believe its future funding requirements could be as much as £20 billion next year to refinance existing mortgages and raise new funds. The sum will be lower if it slashes its lending.
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