Simon Ward has reportedly been scrutinising the Bank's balance sheets and believes they offer some interesting insights into its activity over the past week - suggesting that the BOE ‘supported’ Northern Rock to the value of £2.9 billion.
“The Bank of England’s balance sheet has expanded by 13% over the last week as a result of its intervention to stabilise the banking system. According to the weekly Bank Return, total assets stood at £95.0 billion on 19th September, a rise of £11.3 billion from a week before.
“£8.4 billion of this increase represented stepped-up operations to supply market liquidity. The remaining £2.9 billion occurred in the “other assets” category and may represent the Bank’s lender of last resort support to Northern Rock.
“According to the Bank’s latest Annual Report, its shareholders’ equity stood at £1.9 billion in February 2007.”
In addition to these assertions, the Share Centre has seen a huge increase in investors swooping on Northern Rock’s weak shares.
The retail stockbroker has reported a 591 per cent increase in account openings over the last week alone, with shares in the ailing lender accounting for over a third of all deals on Thursday 20 September. Online share dealing has been cited as a major factor for the rapid surge in activity.
