Is Northern Rock In Trouble Again?
Just when there seemed to be light at the end of the tunnel it seems that Northern Rock may well be about to experience a bout of turbulence in the fight to turn the group around and pay off the debt to the UK government. Plans to hive off a large chunk of the groups quality loans to Lloyds TSB could be fatally flawed and there are signs that the European Commission (EC) may be about to enter the fray again.
The move to tie-up with Lloyds TSB and allow the smooth transfer of customer mortgages to Lloyds may see Northern Rock lose its better quality loans and be left with a higher than average percentage of lower quality mortgages. While this in turn will increase the number of expected repossessions and possible write-offs it could also put back plans to pay off the company’s debt by some time.
There are also signs that the EC may be looking to flex its muscles and force the government to insist on a faster repayment of the debt than the group would be comfortable with. The loan from the government seems to fly in the face of EC completion regulations which prevent government subsidies for ailing businesses.
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