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04/08/2009
Northern Rock Rocked By Losses
A nationalised bank funded by huge amounts of taxpayers' money has reported a loss of £724.2m for the first six months of 2009.
Northern Rock's losses accelerated when compared with a loss of £585.4m in the first half of last year.
In stark contrast to the news yesterday that Barclay's pre-tax profits for the first six months of 2009 topped £2.98 billion, the nationalised bank said that 3.92% of its mortgage loans were more than three months in arrears, well above the national average of 2.39%.
The institution currently owes the government £10.9bn, but is waiting for European regulatory clearance for more funding.
Northern Rock was nationalised in February 2008 after it had to be bailed out by taxpayers in 2007, when its model of borrowing short-term funds from wholesale markets to lend to mortgage borrowers was hit by the credit crunch.
Today, the bank said the total value of all of its loans had fallen by £602.2m in the first six months of the year.
Northern Rock is in the process of splitting itself into two companies, one of which will hold savers' money and be responsible for new lending, while the other will hold many of the existing loans and be responsible for paying back loans to the government.
But, Chief Executive Gary Hoffman told reporters he was making "good progress" in discussions with the Commission and expected to receive clearance in the autumn.
But he added that there would have been demand for the extra money if it had been available and said applications for Northern Rock mortgages had doubled in the second quarter of the year, compared with the first three months of the year.
The underlying loss fell to £269.6m for the six months to 30 June, compared with £443.3m for the same period of 2008.
The underlying figure excludes a £156.4m rebate that it will receive if it gets state aid clearance from the European Commission.
It also excludes what it calls a volatility charge of £298.2m on the way it accounts for the value of certain assets.
See: Barclays Profits Nearly £3 Billion
(BMcC/KMcA)
Northern Rock's losses accelerated when compared with a loss of £585.4m in the first half of last year.
In stark contrast to the news yesterday that Barclay's pre-tax profits for the first six months of 2009 topped £2.98 billion, the nationalised bank said that 3.92% of its mortgage loans were more than three months in arrears, well above the national average of 2.39%.
The institution currently owes the government £10.9bn, but is waiting for European regulatory clearance for more funding.
Northern Rock was nationalised in February 2008 after it had to be bailed out by taxpayers in 2007, when its model of borrowing short-term funds from wholesale markets to lend to mortgage borrowers was hit by the credit crunch.
Today, the bank said the total value of all of its loans had fallen by £602.2m in the first six months of the year.
Northern Rock is in the process of splitting itself into two companies, one of which will hold savers' money and be responsible for new lending, while the other will hold many of the existing loans and be responsible for paying back loans to the government.
But, Chief Executive Gary Hoffman told reporters he was making "good progress" in discussions with the Commission and expected to receive clearance in the autumn.
But he added that there would have been demand for the extra money if it had been available and said applications for Northern Rock mortgages had doubled in the second quarter of the year, compared with the first three months of the year.
The underlying loss fell to £269.6m for the six months to 30 June, compared with £443.3m for the same period of 2008.
The underlying figure excludes a £156.4m rebate that it will receive if it gets state aid clearance from the European Commission.
It also excludes what it calls a volatility charge of £298.2m on the way it accounts for the value of certain assets.
See: Barclays Profits Nearly £3 Billion
(BMcC/KMcA)
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