Northern Rock Set To Clear Overdraft In Three Years
While the financial markets continue to struggle it is the Northern Rock that has given the sector some good cheer with news that it expects to repay the full government loan in 3 years. The company forecast that 25% of the £27 billion loan will be repaid this year, 50% next year and the balance in year three. But is this really possible?
In a move which can account for the whole Northern rock debacle, the group have actually 'stress tested' the repayment forecasts and all seems to stand the test of time. The test showed that the plan was still feasible even if the property market fell by another 10% over the next three years. If the fall was over 10% then the repayment schedule would be put back by no more than 6 months.
While there have been many changes and downsizing issues at the bank, many are surprised that they have come out with a formal repayment schedule. However, it has to be said that this is very good news for the Treasury and Gordon Brown and may go some way to rebuilding part of his reputation as a safe pair of hands.
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