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| Northern Rock makes hefty losses | Northern Rock makes hefty losses |
| (about 1 hour later) | |
| Northern Rock has reported a loss of £724.2m for the first six months of 2009, compared with a loss of £585.4m in the first half of last year. | Northern Rock has reported a loss of £724.2m for the first six months of 2009, compared with a loss of £585.4m in the first half of last year. |
| The nationalised bank said that 3.92% of its mortgage loans were more than three months in arrears, well above the national average of 2.39%. | The nationalised bank said that 3.92% of its mortgage loans were more than three months in arrears, well above the national average of 2.39%. |
| It currently owes the government £10.9bn, but is waiting for European regulatory clearance for more funding. | It currently owes the government £10.9bn, but is waiting for European regulatory clearance for more funding. |
| Northern Rock was nationalised in February 2008. | Northern Rock was nationalised in February 2008. |
| It had to be bailed out by taxpayers in 2007, when its model of borrowing short-term funds from wholesale markets to lend to mortgage borrowers was hit by the credit crunch. | It had to be bailed out by taxpayers in 2007, when its model of borrowing short-term funds from wholesale markets to lend to mortgage borrowers was hit by the credit crunch. |
| Taxpayers are currently nursing a pretty hefty loss on their ownership of the Rock Robert Peston, BBC business editor Read Robert Peston's blog | |
| BBC business editor Robert Peston said that there were tentative signs that Northern Rock may be over the worst. | BBC business editor Robert Peston said that there were tentative signs that Northern Rock may be over the worst. |
| But he added that its mortgages are continuing to go bad at an alarming rate and a faster rate than most of its rivals. | But he added that its mortgages are continuing to go bad at an alarming rate and a faster rate than most of its rivals. |
| The bank said the total value of all of its loans had fallen by £602.2m in the first six months of the year. | The bank said the total value of all of its loans had fallen by £602.2m in the first six months of the year. |
| Additional funding | Additional funding |
| Northern Rock is in the process of splitting itself into two companies, one of which will hold savers' money and be responsible for new lending, while the other will hold many of the existing loans and be responsible for paying back loans to the government. | Northern Rock is in the process of splitting itself into two companies, one of which will hold savers' money and be responsible for new lending, while the other will hold many of the existing loans and be responsible for paying back loans to the government. |
| ANALYSIS Kevin Peachey, personal finance reporter, BBC News Deep in the figures is news of how more and more customers of the nationalised bank are falling into negative equity, meaning they owe more money than their property is worth. | |
| This figure has risen from 33% of mortgage customers at the end of 2008 to 39% now. | |
| For those not intending to move, this is not a great problem. Others who might like to move home will find they must stay as Rock customers, unable to remortgage elsewhere. | |
| But it also shows the effect of falling house prices. | |
| Earlier in the year, the National Audit Office calculated that half of the Rock's mortgage loans would be in negative equity if house prices fell by 10%. So far, both have fallen short of that level, but if interest rates start to rise or job losses increase, repaying these loans could become more of a problem. | |
| Once the restructuring has been completed, the Treasury will provide additional funding if the European Commission agrees to allow the plan. | Once the restructuring has been completed, the Treasury will provide additional funding if the European Commission agrees to allow the plan. |
| Chief executive Gary Hoffman told reporters he was making "good progress" in discussions with the Commission and expected to receive clearance in the autumn. | Chief executive Gary Hoffman told reporters he was making "good progress" in discussions with the Commission and expected to receive clearance in the autumn. |
| Earlier in the year, Northern Rock announced a change to its strategy, which has meant that it has reduced the priority of repaying its loans to the government and instead has tried to increase the amount of money it is lending. | Earlier in the year, Northern Rock announced a change to its strategy, which has meant that it has reduced the priority of repaying its loans to the government and instead has tried to increase the amount of money it is lending. |
| But it has warned it is unlikely to meet its target of £5bn of new lending for this year and is more likely to hit a figure of £4bn. | But it has warned it is unlikely to meet its target of £5bn of new lending for this year and is more likely to hit a figure of £4bn. |
| Mortgage demand | Mortgage demand |
| Mr Hoffman said that the target would be missed, because it was constrained by not yet having received state aid clearance from Europe. | Mr Hoffman said that the target would be missed, because it was constrained by not yet having received state aid clearance from Europe. |
| But he added that there would have been demand for the extra money if it had been available and said applications for Northern Rock mortgages had doubled in the second quarter of the year, compared with the first three months of the year. | But he added that there would have been demand for the extra money if it had been available and said applications for Northern Rock mortgages had doubled in the second quarter of the year, compared with the first three months of the year. |
| FROM THE TODAY PROGRAMME More from Today programme | |
| In addition to reporting statutory losses, Northern Rock also released an underlying figure, which it said gave a better reflection of the state of the business. | In addition to reporting statutory losses, Northern Rock also released an underlying figure, which it said gave a better reflection of the state of the business. |
| The underlying loss fell to £269.6m for the six months to 30 June, compared with £443.3m for the same period of 2008. | The underlying loss fell to £269.6m for the six months to 30 June, compared with £443.3m for the same period of 2008. |
| The underlying figure excludes a £156.4m rebate that it will receive if it gets state aid clearance from the European Commission. | The underlying figure excludes a £156.4m rebate that it will receive if it gets state aid clearance from the European Commission. |
| It also excludes what it calls a volatility charge of £298.2m on the way it accounts for the value of certain assets. | It also excludes what it calls a volatility charge of £298.2m on the way it accounts for the value of certain assets. |
| Are you a Northern Rock customer? Send us your views on the issues in this story. | Are you a Northern Rock customer? Send us your views on the issues in this story. |
| The BBC may edit your comments and not all emails will be published. Your comments may be published on any BBC media worldwide. Terms & Conditions | The BBC may edit your comments and not all emails will be published. Your comments may be published on any BBC media worldwide. Terms & Conditions |