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Sterling has today picked up sharply after weeks and weeks of pressure and selling by investors. This comes just ahead of the MPC meeting to decide their next move on UK base rates and until just a...
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Thursday 20th November 2008
In a rather complex situation it has been revealed that Northern Rock's independent off-balance-sheet funding vehicle has granted an extra £3 billion of taxpayers money to cover mortgages which the bank was unable to transfer. In simple terms the cushion between the money Northern Rock owes it's off-balance-sheet funding vehicle, Granite, and the amount of the mortgages left on the books has deteriorated of late.
Many banking analysts are awaiting the next report on Northern Rock with anticipation with many expecting the government to inject a further £3 billion into the business before the end of the year. After a very good start on its repayment programme, Northern Rock has fallen by the wayside of late and there are fears that the amount of outstanding money to the taxpayer will increase over the next few months.
In effect by encouraging many of the banks better quality mortgage holders to migrate to competitors, Northern Rock was able to bring in a substantial amount of cash in a short period of time which was used to reduce the debt levels. Now that these quality mortgages have gone there is a fear that the bank is left with the rump which is reducing in value each and every day in line with the property market. |
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