BusinessBusiness RecoveryFSA: Northern Rock ‘solvent’

FSA: Northern Rock 'solvent'

Watchdog moves to reassure market that troubled bank is not in danger of collapse

fsa logo

The Financial Services Authority has
issued a statement to reassure the market that mortgage lender
Northern Rock is not in danger of
collapse after there was a rush of customers to withdraw their funds.

‘The FSA reiterates that it judges Northern Rock to be solvent and that
savers can continue to deposit and withdraw funds,’ the FSA said in a statement.

The FSA said problems customers had faced in withdrawing money were not
linked to its financial health and were ‘entirely logistical’.

Northern Rock share price collapsed on Friday after borrowers tried to
withdraw their money after the lender agreed an emergency loan from the
Bank of England to cope with a
lack of liquidity and high interest rates in money markets.

FSA chairman Callum McCarthy added: ‘To be absolutely clear, if we believed
that Northern Rock was not solvent, we would not have allowed it to remain open
for business.’

Further reading:

KPMG called in at mortgage lender

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