Seven facts about Northern Rock
British bank Northern Rock faced long queues of customers looking to withdraw savings and a plunging share price yesterday, after the Bank of England stepped in last week to rescue Britain's fifth-biggest mortgage lender. The following are seven key facts on the bank:
Northern Rock was formed in 1965 as a merger of the Northern Counties Permanent Building Society, established back in 1850, and Rock Building Society. By the time it scrapped its building society status and listed in 1997, it was an amalgamation of 53 societies.
Northern Rock accounts for one in 13 UK home loans and until recently funded the bulk of its mortgages with borrowing on wholesale markets, rather than deposits.
The model - which saw it relying on wholesale sources for 77 percent of funding at the end of June - made Northern Rock one of Britain's most cost-efficient banks before the current crunch dried up liquidity.
The bank has just 76 branches, a measure of its efficiency, a high rate of direct bank accounts, and the proportion of mortgages distributed through intermediaries.
It employed just over 6,200 staff at the end of June.
Northern Rock is primarily a lender to "prime" borrowers. At the end of June, it said only 20 percent of loans were to first-time borrowers, meaning the bulk of its borrowers had proven payment track records.
It had an average loan-to-value ratio of 78 percent in the first half, with 81 percent of mortgages at a ratio above 90 percent.
It originates "sub prime" and self-certified home loans for Lehman Brothers.
Before the run on the bank, it had around 1.4 million savers and some 800,000 mortgage customers.
On listing, the bank set up the Northern Rock Foundation, a charity which receives around 5 percent of the bank's profit.
The foundation is often described as a "poison pill", as it has non-voting and non-dividend paying shares that would convert into just under 15 percent of Northern Rock's shares in the event of a takeover.
Northern Rock's chief executive is Adam Applegarth. A Sunderland-born banking veteran, 45-year-old Applegarth has spent his entire career at the lender he joined in 1983.
The bank is based in Newcastle, in Britain's northeast, and is an active sponsor of local sport - from soccer club Newcastle United to rugby club Newcastle Falcons and the Durham and Middlesex county cricket sides.
Agencies
(China Daily 09/18/2007 page16)
