Mortgage News
BSA lodges EC complaint over Northern Rock
The Building Societies Association (BSA) has lodged a complaint with the European Commission (EC) over Northern Rock’s proposed business plan to divide the company into a good bank containing quality assets and a bad bank containing risky assets.
The BSA has serious concerns that the proposed good bank- BankCo- will attract more than its fair share of the mortgage and savings market and distort competition due to the perceived security of its government backed status.
To tackle the problems, it has asked the EC to remove the Government guarantee covering retail and wholesale deposits and to consider making Northern Rock pay an annual premium to the Government to cover part of the cost of the protection it will gain from the establishment of BankCo.
Rachel Le Brocq, press and public affair manager at the BSA, said BankCo would have a very strong position in the market as it could lend freely without having to absorb losses from non-performing loans.
She added: “We wanted to flag up that this is unlike many of its competitors in the UK mortgage market.”
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