Support for Rock forces City re-think

Oct 6 2007 by Adrian Pearson, The Journal

THE campaign to save Northern Rock has forced City investors into a rethink over the bank’s future, a financial expert said yesterday.

Despite weeks of speculation among London financial experts that the bank’s days were numbered, leading worldwide brokerage firm BGC has predicted the campaign to back the Rock may have avoided the need for a quick sale.

David Buick, BGC’s head of marketing, said Northern Rock may well have turned the corner, thanks to impressive local support.

When asked how the City had reacted to Northern Rock borrowing £2.9bn last week, and almost £11bn from the Bank of England in total, Mr Buick said the general feeling was one of impatience.

“This has taken far too long to come to fruition. The longer this goes on and the more people start talking about falling property prices, the more that portfolio of mortgages will be down valued. Every one is talking about £1.90 a share but I’m saying oh really?

“It would be really nice to see the Northern Rock name stay. I thought it was impossible two weeks ago but when you think about the fervent support and loyalty from people in the North-East with people like Newcastle United and Scottish and Newcastle breweries, you will not get stronger than that and it has every chance.”

Mr Buick later told The Journal: “The country and the North-East of England need a resolution to this soon.

“In the long term the bank may face difficulties but the quality of its mortgage book is pretty good.

“If anyone had suggested a week ago that the bank could continue I would have laughed. But when you consider the wonderful people in the North-East and the incredible support they have shown then the bank could have a good future ahead of it.”

Journal editor Brian Aitken welcomed the support for the bank.

“Over the last few weeks a lot of analysts have predicted the worst for Northern Rock and its staff. They have criticised the bank and assumed the worst. Now we are seeing people in London wake up to the fact that there is massive support for the bank in the North-East, led by The Journal but taken up enthusiastically by businesses across the region ”

A spokesman for the bank said that while the support was welcomed, it would be inappropriate to comment on any future sale of Northern Rock.

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Online support is steadily growing

ONLINE support for Northern Rock is growing.

A petition set up on the Prime Minister’s website urging Gordon Brown to prevent a hasty sale of the troubled Newcastle-based bank has attracted more support.

The petition closes on October 22 but has so far attracted 611 signatures.

Set up by Robert Bacon, the petition says: “We the undersigned petition the Prime Minister to actively support Northern Rock against pressure from the Treasury/FSA and the Bank of England to complete a Fire Sale at way below true long term market value of the company.”

To register your support go to http://petitions.pm.gov.uk/SupportNR/

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Crisis likely to hit UK economy

CHANCELLOR Alistair Darling is expected to admit next week that the UK economy will grow by less than previously forecast in 2008.

Mr Darling signalled the likely downgrade after admitting the recent credit squeeze, sparked by defaults on US sub-prime mortgages, would have “some effect” on the UK economy.

The 2.5% to 3% growth range pencilled in by former Chancellor Gordon Brown could be trimmed to 2% to 2.5%, experts said. Most economists are predicting growth of 2.2% in 2008 so will be unsurprised by Mr Darling’s likely revision, expected in a pre-Budget Report statement next week.

He said the crisis, which prompted September’s run on mortgage lender Northern Rock, would “undoubtedly” have an effect on Britain.

Northern Rock’s woes will be back in the spotlight next week as the Financial Services Authority (FSA) faces questions over its handling of the crisis from MPs on the Treasury Select Committee.

Shares last night fell by 3.2p, finishing at 158.5p as the company slipped back from three consecutive sessions of gains after reports the bank had borrowed an extra £2.9bn in the last week.

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Encourage others to open account

THE Journal is calling on the region to rally around Northern Rock.

We are asking members and supporters of all those organisations who have been helped by Northern Rock and its foundation, as well as our readers and the North-East community, to demonstrate their faith and confidence by opening an account with Northern Rock.

You can do it for just £1, or as much as you like. And we ask every organisation Northern Rock and its foundation have supported to use its mailing list to encourage others to open an account also.

Our front page launching the campaign is available in an electronic file you can request from (0191) 201-6344 or jnl.newsdesk@ncjmedia.co.uk – to send to your contacts, for them to pass on.