Thursday, Oct 04, 2007
Northern Rock borrows £2.9bn more
FT.com: Northern Rock borrows £2.9bn more
"Mr Flowers’ strategy for Northern Rock is understood to depend on an assumption that conditions in the credit market will recover soon. If these deteriorate, his bid may become unviable, some financiers believe.". Er....
Posted by whiteknight @ 10:47 PM (496 views) Add Comment
6 Comments
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1. whiteknight said...
Just reread this piece aswell:
"Andra Ap-Fonden, a Swedish pension fund, on Thursday bought 500,000 shares in Northern Rock to raise its stake in the bank to 1.1 per cent."
Excellent. Excellent. I would just love to have a pension in Sweeden right now. Although i guess this is government backed to some extent. Guess the guy figures there is little else safer
2. alan said...
Information on Sub-Prime is given in the adjacent post. I think the Sub-Prime crisis has more victims to claim, yet!
3. David Smith's Sub Prime. . . said...
One banking analyst said he was surprised Northern Rock had reached this level of borrowing from the Bank so quickly.
Oh dear oh dear...
And it looks like Prime Minister (Crash Gordon) Brown Unelect won't be able to go to the polls this Autumn. What's round the corner crash?
4. tyrellcorporation said...
When is the BoE going to turn off life support?
5. uncle chris said...
"When is the BoE going to turn off life support?"
Once the election is out of the way. Oh sorry I forgot, the BoE is independent .... silly me.
6. paul said...
Yes, quite uncle chris.
So the bank now owes a fraction under half of its deposits, and the amount it has borrowed is incurring interest.
Lets do some maths, to see how much Northern Rock can afford.
£11bn borrowed at the bank's penalty rate of 1% above base (6.75%) works out as:
£11,000,000,000 x (0.0675/12) = £61,875,000 per month on an interest only repayment plan.
(Remember you may lose your business if you cannot keep up your repayments).