Rock debt rises as shares plummet

2 November 2007

Northern Rock has seen its share price tumble further as new reports suggest its debt is continuing to stack up.

Figures from the Bank of England have revealed that there was a $4.5 billion increase in "other assets" for the week to October 31st, suggesting that Northern Rock had drawn down more of its credit line.

As a result of these figures, Northern Rock's share price suffered a further drop, with a 6.5 per cent fall in the stock.

Simon Ward, chief economist at New Star Asset Management, told the Times that he expects Northern Rock's debt with the central bank to reach $62.5 billion.

"The weekly rise [of $4.5 billion] is the smallest since the Rock crisis broke, but follows a $9.7 billion gain last week," he explained.

Northern Rock's share price finished at $3.58 on Thursday, after going into freefall during the crisis that followed the news that it had taken out an emergency loan with the Bank of England.

Meanwhile, banks met with the central bank, the Treasury and the Financial Services Authority on Thursday to discuss how to tackle the current credit crunch affecting the UK markets.

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