Northern Rock cuts its emergency borrowing down to £500million
09 November 2007
Northern Rock has cut its weekly borrowing from an emergency Government loan down from around 4.6 billion two weeks ago and 2.2billion last week to £500million this week.
Experts say the cut in borrowing is an indication that the flailing bank’s finances are eventually beginning to stabilise.
Since the crisis began more than eight weeks ago, Northern Rock has borrowed around £23billion from the Bank of England, but experts believe it could reach £30billion, with New Star economist Simon Ward telling Money Marketing "With deliberations on Northern Rock’s future dragging on the loan seems likely to grow further and may approach £30bn, the amount requested from the BoE by Lloyds TSB as a condition of its aborted rescue takeover.”
Since its near demise, the Newcastle based bank has been seeking the possibility of a rescue take over, and has been in talks with three potential bidders – JC Flowers, New York private equity house Cerebus and the Virgin Group.
However, as the three front runners registered their interest some weeks ago, it is thought that they may now not pursue a takeover, which would leave Northern Rock to go into administration.
Yesterday, shares in Northern Rock took yet another tumble, dropping to below 140p before eventually closing at 150p; at the beginning of the year they were worth £12.
© Fair Investment Company