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Friday, January 11, 2008

Northern Rock's Black Hole

Northern Rock has revealed a £100M black hole in its pension fund which, if the bank were to be sold, would cost £200M to wind up.

Northern Rock also stated that it has finalised a deal with investment bank JP Morgan, which is buying its portfolio of lifetime home equity release mortgages. The gross asset value of the portfolio is £2.2BN (2% of Northern Rock's total assets).

It received a 2.5% premium on the sale.

Seemingly the best way for this bank to survive in any shape of form in the short term, may be for it to sell off its assets piece by piece; then liquidate itself, and put itself out its misery.

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