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Northern Rock Makes "Encouraging" Progress

By: Beverley Bukowski

Despite the current economic conditions, Northern Rock's quarterly report indicates that they are making "solid progress" with their business plan. In the report, the Newcastle-based bank said that the UK mortgage market remains "uncertain" and that arrears had increased, but their progress was so far "encouraging."

Northern Rock chairman Ron Sandler said in the report that the credit quality of their loans remained "satisfactory" in spite of the current harsh economic conditions. Indeed, the report said that the bank's loan facilities stood at £24.1 billion at the end of March, which was down from £26.9 billion reported at the end of 2007.

In order to try and reduce the amount on their balance sheet, the stricken bank has been tying to transfer a number of its mortgage customers to other lenders. However, the credit crunch has made doing this harder than the bank had originally anticipated, as it has had a real impact on the availability of mortgages. As Mr Sandler explains: "This (financial) environment presents Northern Rock with challenges, especially as regards the company's ability to meet its targeted mortgage redemption levels in the future." The bank has also tried to attract more savings from its customers in order to give Northern Rock a more balanced funding base.

Prior to its collapse, Northern Rock had relied mainly on borrowing from money markets to fund mortgage lending, rather than relying on their own deposits. This left them very weak after the global credit crunch, so the bank were forced to seek emergency funds from the Bank of England in September last year. The bank was later nationalised in February 2008, although there are plans in place that will see the bank repay their debt to the government and regain private control.

Mr Sandler said that the nationalised bank's plan to return back to private ownership was "progressing" despite the harsh economic environment. He said: "Nevertheless, given this backdrop, the company's progress against its plan to date is encouraging." He also added: "We remain firmly focused on our business priorities of repaying the government debt, releasing the guarantee arrangements and, in due course, returning Northern Rock to private ownership."

In another attempt to regain full control of their business, the bank has announced a major restructuring plan that will see over 2,000 job losses. In addition to this, the bank plans to offer a small range of new mortgage products, although gross residential mortgage lending in the first quarter of this year remains just £1.2 billion.

Article Source: http://ezine-articles-planet.com

Source: Kirsten
Beverley Bukowski provides incalls appointments in Newcastle. She is a keen female model in the North East.

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