The troubled lender has reportedly sought legal advice on whether it could get around European Union rules on financial aid.
At present, European law dictates that government is allowed to give aid to companies for six months, after which time the aid must stop and companies who were still in trouble must be restructured.
Northern Rock has received around £20 billion in funding from the Bank of England since it first applied for emergency funds in September, and although its pace of borrowing has slowed, the figure was expected to grow to £30 billion before the end of the year.
In a previous statement, Northern Rock claimed that the ‘outlook for 2008 would depend on the speed of the recovery in global wholesale funding markets and where interest rate spreads stabilise in the global wholesale funding markets, as well as the evolution of the company’s business model’.
The Bank of England and HM Treasury have announced that they will extend the guarantee arrangements already provided for existing deposits to cover new deposits made with Northern Rock, which will remain in place during the current instability.
Sean Gardner, chief executive of MoneyExpert.com, said: “The queues outside branches may have gone but the concerns remain. It’s interesting to see that, despite increased competition having made such a huge impression on the banking landscape, many people now appear to be giving a greater vote of confidence to high street banks.”
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