£585m loss for Northern Rock

A report by Northern Rock, once the 5th biggest mortgage lender, shows losses of £585.4m for the first 6 months of the year.

The main bulk of the loss was down to the charges it takes to cover losses from struggling mortgage borrowers.

Northern Rock still owes the bank of England £17.5bn and has paid £9.4bn.

The number of residential mortgage customers in arrears has risen to 1.18%, in June 2007 the figure was 0.38% of mortgages.

The government, which nationalised the lender in February after the first run on a UK bank in more than a century, will inject £3bn to help the bank out, the £3bn cash injection will come by pausing repayment of the large taxpayer loan to the bank, so the £3bn will be turned into equity.

When the wholesale markets dried up Northern Rock was hit hard, the bank was taken into public ownership as they were unable to find and investor from the private sector.

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