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UK agency: Northern Rock not competing unfairly

UK agency: Northern Rock not competing unfairly

State ownership of mortgage lender Northern Rock has not unfairly affected competition among banks, Britain's anti-monopoly watchdog reported Tuesday.
The Office of Fair Trading said it found no evidence that the government's 100 percent guarantee on deposits had attracted a large wave of savings, nor did it find that Northern Rock had an advantage in the mortgage market.
"The instability and change within the sector continues and is likely to reduce the impact on competition of the public support specifically targeted at Northern Rock," the agency said.
The run on deposits at Northern Rock in 2007 proved to be only the first big crisis in the meltdown of Britain's banking sector.
Since Northern Rock was taken over a year ago, the government also took control of mortgage lender Bradford & Bingley and is taking controlling stakes in two major banks, Royal Bank of Scotland and Lloyds Banking Group.
Under public ownership, Northern Rock had been trimming its mortgage book and turning away new business as it repaid 18 billion pounds ($24.9 billion) of its 27 billion pounds loan from the government. Last month, at the government's direction, Northern Rock said it would step up mortgage lending while slowing the pace of its loan repayments.
Retail savings balances rose to 19.6 billion pounds at the end of the year, up from 10.5 billion pounds at the end of 2007, the bank said. That brought the bank's deposits roughly back to the level at the end of 2006.
"Taken collectively, considering the limited available information, reviewing the application of the Competitive Framework and in the context of wider financial instability, the OFT has concluded that ... public support for Northern Rock did not have a significantly adverse impact on competition," the agency said.
As of October, the agency said Northern Rock accounted for 5.5 percent of the mortgage market, compared to 7.5 percent at the end of 2007. The bank also accounts for 1.5 percent of savings deposits and 1.4 percent of investment products, the OFT said.
"Given the announcement that Northern Rock will restart mortgage lending in 2009-10 the impact of the public support for Northern Rock may be more significant in the future," the report added.
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On the Net:
http://www.oft.gov.uk/
http://www.northernrock.co.uk/


Updated : 2021-06-24 12:14 GMT+08:00