Royal Bank of Scotland, Barclays and Citi have offered to securitise half of the Bank of England’s emergency loan to Northern Rock, in a move which would cut the public’s exposure to the stricken bank. Sunday Telegraph Sunday Times
The three banks approached the Treasury in the past few days offering to securitise £12.5bn of Northern Rock’s mortgage assets in the market.
The plan is designed as an alternative to a scheme devised by the Government’s adviser, Goldman Sachs, to turn all of the £25bn of emergency loans to the Newcastle-based lender into bonds which would be sold to investors.
Under this plan, the Government would guarantee the bonds for three years, by which point it hopes Northern Rock would have repaid them.
There is growing disquiet among investors in Northern Rock about the terms of the Virgin Group-led consortium’s bid to take over the stricken mortgage bank.
Investors, thought to include Legal & General and Schroders, as well as hedge funds RAB Capital and SRM Global, have become increasingly concerned at the consortium’s claim that Virgin Money is worth £250m.