N. Rock borrowing from BoE seen near 8 bln stg

Subscribe to Oneindia News

LONDON, Sept 28 (Reuters) Stricken British mortgage lender Northern Rock may have borrowed a further 5 billion pounds (.1 billion) from the Bank of England in the past week, an economist said after analysing Bank of England data.

That would take Northern Rock's borrowing from the Bank of England to almost 8 billion pounds since the central bank stepped in to offer emergency funding two weeks ago.

The Bank of England's weekly accounts showed that in the past two weeks its assets had grown by 14.3 billion pounds, including 7.75 billion pounds classified under ''other assets'', according to Simon Ward, economist at fund manager New Star.

Ward said this was likely to include the Bank's ''lender of last resort'' support to Northern Rock.

''It is possible that other undisclosed activities have contributed to the increase, but the latest figures will fuel speculation that the Bank has been forced to extend massive support to the troubled mortgage lender,'' Ward said.

The company's shares were down 4.1 percent at 185.4 pence in early trade.

Northern Rock has refused to comment on whether it has drawn on the Bank's lending facility, which is at a penal interest rate.

The amount it is estimated to have borrowed would be equivalent to one-third of the bank's retail deposits, which stood at 24 billion pounds at the end of June.

REUTERS PBB HS1558

Please Wait while comments are loading...