{"id":2576,"date":"2008-06-17T07:08:15","date_gmt":"2008-06-17T07:08:15","guid":{"rendered":"https:\/\/mmm.9dotdigital.ca\/?p=2576"},"modified":"2025-03-27T15:48:37","modified_gmt":"2025-03-27T15:48:37","slug":"northern-rock-should-sandler-slow-down","status":"publish","type":"post","link":"https:\/\/mmm.9dotdigital.ca\/?p=2576","title":{"rendered":"Northern Rock: should Sandler slow down?"},"content":{"rendered":"<p>Northern Rock appears to be repaying its Bank of England loan faster than projected in its <a href=\"http:\/\/companyinfo.northernrock.co.uk\/downloads\/Summary_of_Proposed_Business_Plan.pdf\" target=\"_blank\">restructuring plan<\/a>. While good news for Ron Sandler &amp; co., Rock&rsquo;s rapid shrinkage is exacerbating the current mortgage market squeeze, with negative macroeconomic implications. <\/p>\n<p>The restructuring plan projects a 25% repayment of the BoE \/ government loan in 2008, implying a reduction from &pound;26.9 billion on 31 December 2007 to about &pound;20 billion. According to a <a href=\"http:\/\/companyinfo.northernrock.co.uk\/downloads\/Q1_Statement_08.05.11%20final.pdf\" target=\"_blank\">trading update<\/a> on 12 May, the loan had declined to &pound;24.1 billion by 31 March. More recent developments can be estimated from the weekly <a href=\"http:\/\/www.bankofengland.co.uk\/publications\/bankreturn\/index.htm\" target=\"_blank\">BoE return<\/a>. &ldquo;Other assets&rdquo; fell by &pound;7.9 billion between 2 April and last week. As well as the Rock loan, this category includes foreign currency lending, which may have declined by &pound;4 billion over this period, judging from information in the latest BoE <em><a href=\"http:\/\/www.bankofengland.co.uk\/publications\/quarterlybulletin\/mo08may.pdf\" target=\"_blank\">Quarterly Bulletin<\/a><\/em> (see p.137). A reasonable assumption is that Rock has repaid a further &pound;3-4 billion since the end of March, implying the outstanding loan may already be close to the &pound;20 billion full-year target. <\/p>\n<p>The repayment is likely to have been funded mainly from mortgage redemptions. The restructuring plan projects a fall in Northern Rock&rsquo;s share of the stock of mortgages from 7.5% at the end of last year to 3.7% by December 2009, implying a nominal reduction of about &pound;20 billion a year in 2008 and 2009. Economy-wide net mortgage lending totalled in &pound;108 billion last year, of which Rock contributed &pound;13 billion. Its U-turn will therefore cut the supply of mortgage loans by over &pound;30 billion in 2008 compared with last year &ndash; significantly worsening the impact of the wider credit &ldquo;crisis&rdquo;. <\/p>\n<p>The government may be constrained by EU state aid regulations but a less rapid reduction in Northern Rock&rsquo;s mortgage book would help to reduce the risk of a severe economic downturn.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Northern Rock appears to be repaying its Bank of England loan faster than projected in its restructuring plan. While good news for Ron Sandler &amp; co., Rock&rsquo;s rapid shrinkage is exacerbating the current mortgage market squeeze, with negative macroeconomic implications. The restructuring plan projects a 25% repayment of the BoE \/ government loan in 2008, [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-2576","post","type-post","status-publish","format-standard","hentry","category-money-moves-markets"],"_links":{"self":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2576","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2576"}],"version-history":[{"count":1,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2576\/revisions"}],"predecessor-version":[{"id":4885,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2576\/revisions\/4885"}],"wp:attachment":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2576"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2576"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2576"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}