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Northern Rock slashes BoE borrowing

Media reports have revealed that financially struggling Northern Rock has cut its weekly borrowing from the Bank of England's emergency funding service to GBP500 million.

It is understood that so far, the Newcastle-based bank has borrowed a staggering sum of GBP20 billion to help support its mortgage lending, which has been particularly hard hit by the US sub-prime crisis. The Guardian revealed that the bank would most likely require further funds, which would bring the total amount borrowed to more than GBP25 billion.

According to the Financial Times, the UK mortgage lender has an estimated £14 billion in short- and medium-term funding that needs to be refinanced in the next year.

At present, the struggling bank is seeking a potential bidder for its takeover to help rescue it from its current turmoil, with media reports speculating that the bank has contacted several financial institutions in China and the Far East, including Industrial and Commercial Bank of China.

Following all this market turmoil, Northern Rock shares plunged to GBP1.50 per share. At the start of 2007, the bank’s shares were worth over GBP12 each.