Friday 12th October 2007
Figures from the Bank of England show that the institution has provided nearly £13 billion to financial services providers through its short-loan facility.
And the majority of the £12.9 billion total could be assistance provided to Northern Rock, observes Simon Ward, economist at New Star.
He adds that by refusing to help Northern Rock through its illiquidity crisis, other banks have forced the Bank of England to relax the terms of its lending.
"The weekly increase has slowed from £2.9 billion in the week to October 3rd and £4.9 billion in the prior week," Mr Ward comments.
"However, the continuing erosion of Northern Rocks funding base explains the governments decision this week to extend its guarantee."
Mr Ward concludes that an influx of funds from disgruntled customers into other banks has further added to the liquidity of those institutions.
Earlier this week, it was revealed that Northern Rock had simplified its range of mortgages with the removal of about two-thirds of its products.
©
Fill out a form to speak to an advisor about what type of loans might be right for you.
