Northern Rock announces massive half-year losses
Northern Rock has today announced half-year losses of £725 million after a disastrous period in the history of the nationalised operation. Despite the fact that the UK government had been hinting towards a potential sale of the operation before the election, it now seems that any sale of any part of the business will now be some way off. However, the problems for Northern Rock are very deep-rooted and may yet cause further concern for taxpayers.
It has emerged that four out of every 10 borrowers through Northern Rock are in negative equity and a massive 22,000 people are in arrears on their mortgage. When you consider that the operation still owes the UK taxpayer £10.9 billion in loans there really is very little to look forward to in the short to medium term. Gordon Brown and Alistair Darling's plans to split the business into a "good bank" and a "bad bank" have now been torpedoed below the waterline amid concern that UK taxpayers may never get a return on their money.
It is the state of the company's mortgage book which is causing most concern at a time when other banks in the UK are starting to see their business pickup. The flip flop strategies of the Northern Rock management may well have come back to haunt them.
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