Northern Rock has halted payments on some of its subordinated debt to help conserve capital – its first deferred coupon payments since nationalisation.
The bank, which recently reported first-half losses of £725m, said it had deferred payment of those subordinated debt coupons – mostly tier one and upper tier two debt – that it was permitted to defer.
The Newcastle bank will continue to make payments on other bonds. Granite, the securitisation vehicle of the bank, will be unaffected.
Northern Rock said it had taken the action because its capital base had fallen to a level below its minimum regulatory capital requirement.
Financial Times, The Times, Daily Telegraph