Ascension : Banking News Submitted by The Islander (Gavin Yon) 20.09.2007 (Article Archived on 04.10.2007)
Formerly the Northern Rock Building Society. Became a bank in 1997 when the society converted to being a limited company.
The bank’s primary business is mortgage lending (‘Housing Loans’).
The source of the funds for this lending used to be money deposited by individuals in savings accounts, but since its conversion to a limited company the bank has increasingly funded its lending from money borrowed from other banks, through the inter-bank market. Now about ¾ of the bank’s funding comes from the inter-bank market.
Recently the inter-bank lending market has tightened and Northern Rock has had difficulty obtaining the money it needs from the inter-bank market. It therefore applied last week for emergency funding from the Bank of England, to allow it to continue operating until the inter-bank position improves.
Other UK banks supplement deposits with inter-bank loans to fund their lending, but are not as exposed as Northern Rock. If the inter-bank tightening continues other small UK banks could suffer but the larger banks will be better protected.
Bank of St. Helena does not borrow on the inter-bank markets.
Bank of St. Helena’s lending is therefore unaffected by the tightening of the inter-bank markets.
|