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Northern Rock in loss amid repossessions, arrears

NATIONALIZED mortgage lender Northern Rock today reported a pretax loss of 1.38 billion pounds (US$1.95 billion) for the full year 2008, as arrears and the stock of repossessed property increased amid a deterioration in the economy.

The loss, nearly eight times the 2007 shortfall of 243.5 million pounds, included 894.4 million pounds in impairment provisions on retail loans. That is up from 239.7 million pounds in 2007, the last full year before Northern Rock was taken over by the government.

Residential mortgage balances were trimmed by 27 percent to 66.7 billion pounds, while deposit balances rose from 10.5 billion pounds to 19.6 billion pounds.

Arrears of more than three months increased to 2.9 percent at the end of 2008, compared with 1.2 percent in June and less than half a percent at the end of 2007.

Northern Rock suffered a run by depositors after its sources of wholesale borrowing dried up as the credit crunch took hold last year. The government pumped 27 billion pounds in loans and assumed contingent liabilities of 29 billion pounds in an effort to keep Northern Rock afloat, before resorting to nationalization on Feb. 22, 2008.


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