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Injin

Northern Rock Reports £724m First-half Loss

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http://www.guardian.co.uk/business/2009/au...thern-rock-loss

More than 22,000 customers of Northern Rock are three months or more behind with their mortgage payments, the state-owned lender said today as it reported a first half loss of £724m.

The Newcastle-based bank, which is to be split into so-called good and bad banks, insisted that there was no timetable to find a buyer for the business before the next general election despite repeated speculation that this is the government's intention.

Gary Hoffman, chief executive, said: "The current environment continues to be challenging. However, against this backdrop Northern Rock is making progress against its revised plan and has delivered results in line with expectations. We anticipate receiving state aid approval in the autumn and the legal and capital restructuring of the company to be completed by the end of the year. This ultimately prepares for a return to the private sector."

He said that once the bank is divided into BankCo, which will carry out new lending, and AssetCo, which will hold the troubled mortgage book and the government loan, both businesses might prove attractive to private sector bidders. But, Hoffman stressed "there is no process under way" to look for bidders. The process needs state aid approval from the EU.

The Co-operative party, which sponsors Treasury select committee chairman John McFall, urged the government to avoid a private sale and remutualise the bank which converted from a building society 10 years ago.

The party's general secretary Michael Stephenson said: "Selling off Northern Rock to private investors, like the disastrous policy of the last Conservative government who encouraged building societies like Northern Rock to de-mutualise in the first place, is the wrong answer to the wrong question. Just because civil servants fail to remember the mistakes of the last Conservative government, it does not mean that ministers should repeat them".

The proportion of Northern Rock customers encountering difficulties repaying their loans has risen to 3.92% by the end of June - some 22,141 customers - up from 3.67% at the end of March and 2.92% at 31 December 2008.

However, Hoffman said there signs that the number of customers in earlier stage arrears - missing just one or two mortgage payments - was slowing because of low interest rates. He said that a year or so ago when customers were coming off fixed rate deals their monthly repayments were jumping as much as £150 but this was no longer the case as they were now transferring to lower repayments.

"We are seeing some encouraging signs in our early arrears," Hoffman said, echoing comments by Barclays and HSBC yesterday that there may be some levelling off in impairment charges following dramatic rises as the recession began last year.

The impairment charge was £602m up from £192m a year ago but down from the £702m in the last six months of 2008 and it expects the charge in the second half to be "broadly similar" to the first half.

The £724m loss for the six months to June was caused by a number of accounting technicalities.

There is a volatility charge of £298m which is related to the way it accounts for certain of its assets and a £156m charge which is related to the rate of interest the bank pays for the government loan which has kept it afloat since September 2007 when its market funding dried up and caused a run on the bank. The underlying loss is reduced to £270m in the six months to end June compared with £443m a year ago.

Hoffman said the number of homes it has repossessed had fallen from a peak of over 4,000 to 2,522 as it tried to take steps to help troubled customers stay in their homes.

While the lender suffered a dramatic outflow of funds in September 2007 when its difficulties first emerged and then inflows during last year's banking crisis when it was regarded as a safe haven because of the government guarantee, it is now suffering withdrawals of cash again. Hoffman said this was sign of normality was returning to the banking sector and in line with experiences of National Savings & Investments and building societies which are also losing savers who are returning to private sector banks.

Northern Rock's retail deposits at the end of June were £18.4bn, compared with £19.6bn at the end of last year.

After demanding Northern Rock halt new mortgage lending to enable it repay the government loan, chancellor Alistair Darling wants the EU to allow the bank to turn into an active lender again by providing £14bn of mortgages this year and next. Some £5bn of that was intended to happen this year but Hoffman said this target would be missed because the bank does not have enough capital to support the additional lending and will achieve £4bn instead. It will be back on track once the government is allowed to pump in more money.

The bank owes £10.9bn to the taxpayer, compared with £8.9bn at the end of December, which it said was in line with its revised business plan, ending its attempts to lose mortgage customers and instead starting to look for customers again.

Right, so the losses are much larger and they are playing games with definitions again.

They've also stopped reposssessing to make their books look better.

lie, print, lie, print, lie, print

Sorry mods, just seen the other thread. Please merge.

Edited by Injin

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32909.090909090909090909090909091 per customer?

More than 22,000 customers of Northern Rock are three months or more behind with their mortgage payments, the state-owned lender said today as it reported a first half loss of £724m.

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Guest DisposableHeroes
http://www.guardian.co.uk/business/2009/au...thern-rock-loss

Right, so the losses are much larger and they are playing games with definitions again.

They've also stopped reposssessing to make their books look better.

lie, print, lie, print, lie, print

Sorry mods, just seen the other thread. Please merge.

I find all these financial stories really depressing. I've stopped listing to radio 5 live and the tv news because of it. It wasn't doing me any good, there's nothing I can do about it, so why dwell on it.

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Guest KingCharles1st

I'm just trying to work out how those 22,000 customers are going to contribute with regard to increasing the average price of a house over he next quarter... :unsure:

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Hmmm... just wondering, with all these big numbers banded about at NRK, does that mean the staff and directors will all be getting a big fat juicy bonus soon? :rolleyes:

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