Northern Rock bought the grounds of Newcastle Falcons rugby club for almost £15m three weeks before the bank had to appeal to the Bank of England for an emergency loan. Daily Telegraph
The transaction has come to light because it was recorded in the accounts of the Falcons, which sold its grounds at Kingston Park to Northern Rock on August 17 after struggling to meet its mortgage repayments to the bank. It has been seized on by critics as more evidence of the bank’s increasingly desperate acts to bolster its 2007 results.
The transaction – said by analysts to have been at a high price – may also raise eyebrows among the bank’s investors, who face getting nothing now Northern Rock has been nationalised, and the Government, which is liable for any losses the bank incurs.
The land value of the Falcons grounds is thought to be about £5m. Northern Rock increased the price it could pay to £14.75m by valuing part of the land for its potential for redevelopment as residential property.
Sources have said the decision was surprising as the Falcons have a lease which guarantees they can use the grounds for sports purposes for more than a decade. 'Rock bought a debt they could not get much value from for about 12 years,' one source said.