Just weeks after Northern Rock borrowing from the Bank of England hit £10 billion, Bank of England data suggests that amount has swelled significantly in the past two weeks. It now appears that since September 14th, the troubled mortgage lender has borrowed £16 billion in emergency funds, with the bank borrowing £3 billion in each of the last two weeks.
The amount appears in the ‘other assets’ category of the Bank of England’s weekly accounts, which includes the central bank’s emergency support to banks. The loans are valid for six months before regulations demand that the money is paid back, leaving any potential bidders for the company with a six month window to stabilise finances .
Sir Richard Branson’s Virgin have recently emerged as favourites to win the takeover battle, though the Bank of England this week revealed that they turned down a request for a £30 billion loan from an unnamed bank wishing to takeover Northern Rock. The bank referred to is believed to be Lloyds TSB, though the central bank reportedly believed ‘it would be inappropriate to help finance a bid by one bank for another’. However, the bank also confirmed that emergency funding would continue to be available to Northern Rock after a takeover, which could provide a loophole for Lloyds TSB to exploit.
Bank of England Borrowings Swell Further
Bank of England Borrowings Swell Further
Wed, 24 Oct 2007
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