Northern Rock reports heavy losses in 2008
Northern Rock made a loss of £1.36 billion in 2008, but said repayment of its loan from the UK government was ahead of schedule.
The UK mortgage lender's losses jumped from £168 million in 2007 to £1.36 billion in 2008, mainly due to impairment losses on its loans, which grew from £240 million in 2007 to £894 million in 2008.
"While this was always envisaged in the [business] plan, the reported loss for 2008 has been exacerbated further by the rapid deterioration in the external environment, with a combination of rising arrears and falling house prices leading to an increased loan impairment charge," said Northern Rock chief executive Gary Hoffman.
Northern Rock was rescued by the UK government following problems in the credit markets in September 2007 and was taken into temporary state ownership in February 2008.
Hoffman said repayment of the company's government loan, set as a priority in its March 2008 business plan, is ahead of schedule despite the losses. The company paid off £18 billion of the loan during 2008, reducing the total from £26.9 billion to £8.9 billion. "The company has been successful in reducing the government loan well ahead of the plan, mainly through a programme of targeted and proactive mortgage redemptions," said Hoffman.
Northern Rock said new residential mortgage lending dropped from £29.5 billion in 2007 to £2.9 billion in 2008, in line with its objective to maintain a presence in the market but scale back its balance sheet. The company no longer offers commercial and unsecured loans, but plans to increase its mortgage lending to £14 billion over the next two years, in an effort by the UK government to fill the gap left by the withdrawal of private-sector lenders.
See also: Northern Rock appoints CRO
Cautious optimism over Northern Rock nationalisation
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Risk management
SEC leadership change puts Treasuries mandate under scrutiny
FICC clearing models approved, but critics think delay could revive prospects of done-away trading
Markets Technology Awards 2025: Untangling the knots
Vendors jockeying for position in this year’s MTAs, as banks and regulators take aim at counterparty blind spots
Risk Awards 2025: The winners
UBS claims top derivatives prize, lifetime award for Don Wilson, JP Morgan wins rates and credit
An AI-first approach to model risk management
Firms must define their AI risk appetite before trying to manage or model it, says Christophe Rougeaux
BofA sets its sights on US synthetic risk transfer market
New trading initiative has already notched at least three transactions
Op risk data: At Trafigura, a $1 billion miss in Mongolia
Also: Insurance cartels, Santander settlement and TSB’s “woeful” customer treatment. Data by ORX News
Cyber risk can be modelled like credit risk, says Richmond Fed
US supervisors may begin to use historical datasets to assess risk at banks and system-wide
The changing shape of risk
S&P Global Market Intelligence’s head of credit and risk solutions reveals how firms are adjusting their strategies and capabilities to embrace a more holistic view of risk