World Credit Crisis -- Northern Rock
People with accounts at the English mortgage lending firm Northern Rock have withdrawn almost £2bn since Friday. This represents about 8% of the £24bn deposits held by the firm.
And the firm is bracing itself for more withdrawals in the coming days.
The issue facing the firm is that although profitable, no one wants to lend into the mortgage market in the wake of the US sub-prime market collapse. "All banks are having greater difficulties than normal getting funding from the market but as a specialist mortgage lender, no-one really wants to lend to Northern Rock." In the first six months of the year, Northern Rock made pre-tax profits of just under £300m, barely changed from the previous year.
However it massively increased its share of the mortgage market, taking 18.9% of all net mortgage lending in the UK against its previous peak of 14.5%, seen in the second half of 2006.
The firm's shares have almost halved in value this year and talk that it may be in further trouble left it as the biggest loser on the FTSE 100 on Thursday, closing down 4.9%.
And the firm is bracing itself for more withdrawals in the coming days.
The issue facing the firm is that although profitable, no one wants to lend into the mortgage market in the wake of the US sub-prime market collapse. "All banks are having greater difficulties than normal getting funding from the market but as a specialist mortgage lender, no-one really wants to lend to Northern Rock." In the first six months of the year, Northern Rock made pre-tax profits of just under £300m, barely changed from the previous year.
However it massively increased its share of the mortgage market, taking 18.9% of all net mortgage lending in the UK against its previous peak of 14.5%, seen in the second half of 2006.
The firm's shares have almost halved in value this year and talk that it may be in further trouble left it as the biggest loser on the FTSE 100 on Thursday, closing down 4.9%.
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