Rock loan: further big increase
Simon Ward
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"Other assets” on the Bank of England’s balance sheet rose by a further £4.7 billion in the week to Wednesday 24th October, bringing the total increase since the run on Northern Rock started to £20.6 billion. This is the best available estimate of the extent of the Bank’s support to the lender.
The weekly increase of £4.7 billion is up from £3.0 billion in the prior week and is the largest since the week to Wednesday 26th September.
The scale of the loan and its continued rapid increase suggest that, as well as losing wholesale funding, Northern Rock has suffered a larger withdrawal by retail customers than the guesses of several billion pounds circulating in the market (£5 billion plus?) This would also fit with the record level of savings receipts reported by building societies in September. (Building societies account for about 20% of all retail deposits and enjoyed an inflow of £2.8 billion last month, up from £1.0 billion in September 2006.)
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