Would - be Rock owner's jobs pledge; Staff will be secure under me, says bidder Northern rock

Evening Chronicle (Newcastle, England), Nov 23, 2007

Byline: By Bill JACOBS Parliamentary Reporter

NORTHERN Rock chiefs have hit back at doubts over the bank's ability to repay its pounds 24 billion taxpayer debts.

National newspaper reports suggest more than 70% - or pounds 53 billion - of the firm's mortgages are owned by a Jersey-based company.

The Guardian says the mortgages are now owned by the off-shore firm - the Rock's Granite Master Issuer - and have been used to underpin a series of bond issues to raise cash for Northern Rock.

The paper says it means the pool of assets available to provide collateral for Northern Rock's creditors, including the Bank of England, is dramatically reduced - calling into question Government claims taxpayers' money is safe.

But Rock chiefs said that the Granite programme was safe and in line with industry expectations.

They added that it only accounts for half the mortgage book, leaving more over pounds 50 billion in other mortgages to more than twice cover the Bank of England emergency loan.

Northern Rock PR manager Jaqualyn Gill said: "We note the Press coverage this morning regarding Northern Rock's Granite programme and suggestions of a hole in Northern Rock's books.

"We would, therefore, like to confirm Northern Rock's Granite programme is well defined and very similar to other UK issuers of securitisation.

"The market is very familiar with Northern Rock's Granite programme.

"Monthly investor reports are published every month.

Our Granite structure and programme reporting are open and transparent.

"Northern Rock has assets of more than pounds 100 billion. Only around half of those assets are securitised as part of the Granite programme, leaving around pounds 50 billion of unencumbered assets.

"Against claims that Northern Rock's loan with the Bank of England is in the order of pounds 23 billion, this would therefore suggest that Northern Rock is able to cover such a figure by around two-fold.

"Northern Rock's asset quality remains strong.

"As previously reported, our level of three-month plus arrears is consistently less than half the industry average.

"At the end of June 2007, the Northern Rock figure for three-month plus arrears was 0.47% against the industry figure of 1.06%.

"Fitch published a note on September 18 in which they confirmed that the underlying mortgage collateral of the Granite trust still remains strong.

"Also, on October 5 Fitch issued a further note supporting the view that Northern Rock's asset quality is good."

Meanwhile, jobs will be protected at Northern Rock if a takeover by Welsh entrepreneur Alf Gooding is successful.

Mr Gooding is a key player in a bid from the Tyne Consortium made up of leading financiers from both sides of the Atlantic.

The consortium has vowed to keep the Northern Rock name, secure jobs and keep the charity arm of the business, the Northern Rock Foundation, intact.

It was revealed this week that a number of bids have been made for the Geordie bank, but several undervalue the firm.

However, sources close to the Tyne Consortium told the Chronicle they will pay the market value for the firm.

And they say they will also offer staff share options.

CAPTION(S):

OFFER: Welsh entrepreneur Alf Gooding's consortium says it will pay the market value for Northern Rock