New Northern Rock posts loss
The new Northern Rock plc retail bank, born from the ashes of the original lender which was Britain's first major credit crisis casualty, posted a maiden loss yesterday and saw deposits plunge by a tenth.
State-owned Northern Rock, which manages new mortgages and savings, posted a loss of £140m for the six months ending June, due to costs for its spin-off from the original company.
The new entity also saw retail deposits drop as savers pulled out from the bank, partly as a result of the British government pulling the plug on its 100pc guarantee of Northern Rock deposits.
Its retail deposit balances stood at £17.6bn at the end of June, down from £19.5bn on January 1.
"I don't think people question the viability of the bank any more, the drop in deposits just reflects the competition in the UK retail banking sector," said Seymour Pierce analyst Bruce Packard.
Northern Rock had to be nationalised in February 2008 after running aground during the credit crisis when its business model of borrowing short-term funds from wholesale markets to lend to mortgage borrowers lay in tatters.
The company split this year into two different divisions grouping its "good" assets and "bad" assets.