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LONDON : Stricken British bank Northern Rock said Friday it had sold part of its mortgage book to US investment bank JP Morgan for 2.25 billion pounds (4.39 billion euros, 2.97 billion dollars) in cash.
The troubled lender, which has been mired in a funding crisis since September, said it would use the cash towards repaying its emergency central bank loan.
"The proceeds from the sale are payable in cash and will be applied by the company to reduce its current funding from the Bank of England," Northern Rock said in a statement. The sale completes on Friday.
Group chief executive Andy Kuipers said the deal was a "positive development," adding that the premium paid by JP Morgan "illustrates the quality of our assets."
The news marks the first major disposal by Northern Rock since it was forced to seek emergency support from the Bank of England as a result of the global credit crunch in September.
That prompted thousands of worried investors to queue at branches of the mortgage lender to withdraw their savings, with a subsequent knock-on effect on consumer confidence in the banking sector.
Thus far, Northern Rock has borrowed an estimated 25 billion pounds (33 billion euros, 49 billion dollars) of British taxpayers' money at a penal rate from the BoE.
- AFP/ms
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