Bank of England
Responding to its decision to step in and provide ‘unlimited’ funding for Northern Rock should the situation require it, the Bank of England released a statement which said:
“The decision to provide a liquidity support facility to Northern Rock reflects the difficulties that it has had in accessing longer term funding and the mortgage securitisation market, on which Northern Rock is particularly reliant.
“In its role as lender of last resort, the Bank of England stands ready to make available facilities in comparable circumstances, where institutions face short-term liquidity difficulties.
“This facility will be available to help Northern Rock to fund its operations during the current period of turbulence in financial markets while Northern Rock works to secure an orderly resolution to its current liquidity problems.”
CML
The Council of Mortgage Lenders (CML) remained optimistic, with director general Michael Coogan commenting: "Consumers need to understand that the problem for lenders generally at the moment is in raising funds, not in lending quality.
"The Bank of England would not have provided the loan to Northern Rock if it had concerns about the quality of the lender's own business.
"All lenders are facing funding pressure at the moment, and what they need is a return to more normal market conditions as quickly as possible. We welcome the Bank's intervention and confirmation that it is keeping a close eye on the situation."
FSA
The Financial Services Authority (FSA) has said that: “Northern Rock is solvent, exceeds its regulatory capital requirement and has a good quality loan book.”
BBA
The British Bankers' Association (BBA) has advised borrowers not to fear the worst in a statement released on Friday: “Northern Rock is a sound and safe bank and there is absolutely no reason for either mortgage customers or savers to worry.
“All Friday’s announcement from the Bank of England, Treasury and the Financial Services Authority means is that Northern Rock has had to make alternative arrangements to meet its normal everyday short term borrowing requirements.
“The British banking system is carefully regulated and overseen which ensures that all banks operate safely and prudently in the interest of their customers.”
