Northern Rock Loans to Expire in Six Months

Fri, 19 Oct 2007

With Northern Rock still undergoing protracted takeover talks, news that the underwriting customer deposits qualify as ‘rescue aid’ could result in a further crisis in six months time. Currently, the Government has given £28bn of guarantees to savers and the bank has borrowed £13bn from the Bank of England in emergency loans. However, both of these must be cut in six months time under European Commission rules as they are classified as ‘rescue aid’. This could lead to a fresh wave of savers withdrawing their savings when the guarantee is removed, potentially undermining an attempt from a new owner to stabilise the business.

A consortium headed by Sir Richard Branson’s Virgin Group is currently favourites to take control of Northern Rock. Talks are believed to be going well and the consortium is reported to have made initial contact with the Treasury and Northern Rock advisers over access to rescue finances . Other members of the consortium include American insurance group AIG, British hedge fund ToscaFund Asset Management, Hong Kong investment group First Eastern and American buyout specialist Wilbur Ross. If Virgin Money’s bid is successful, Branson’s business would be put into Northern Rock alongside an injection of capital in exchange for an estimated 30-50% of Northern Rock, which would be renamed Virgin Money.
add to favouritesnewsletterlink to this pagesend to friendpost comments

Link to this page

Copy and Paste the following HTML into your page.

 

 

Credit Crunch Savers
Amex Cash Back
Credit Card
Get 5% cash back on purchases with Amex
Virgin Credit Card
0% APR on balance transfers for 16 months
Tesco Insurance Sale
50% discount on car and home insurance.
Offer ends 7th Jan 09
Post Office Instant Saver
Protect your savings with the Post Office saver

Paying Too Much?

7 out of 10 people are paying too much for their mortgage. To find out if you're one of them click here or fill out a FREE no obligation enquiry form