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Newcastle boosts capital by £10m

Newcastle has boosted its capital by £10m as it prepares for “exceptional write-offs” due to its exposure to collapsed Icelandic banks.

The capital was raised via the issue of £10m of Permanent Interest Bearing Shares. The PIBS have been issued on a private basis.

The issue was made as the Newcastle braces itself for significant losses stemming from the collapse of the Icelandic banking system in October.

Newcastle’s gross exposure to the banks is £43m, before set-off positions and recoveries.

The mutual says its tier 1 capital levels will still be at about 10% even after absorbing the predicted losses.

But Newcastle adds that as a result of the scale of the write-offs it will post an overall loss for the year.

The capital raising and the context has been discussed with the Financial Services Authority and ratings agencies Fitch and Moody’s.

Colin Seccombe, chief executive of the Newcastle, says: “This additional strengthening of our capital, coupled with our well funded balance sheet, leaves the society in a strong position.

“The capital is being raised as additional comfort in these unprecedented market conditions. Even though the society will report an overall loss for 2008, it enters 2009 with a strong capital and funding base, a robust business model and a clear strategy for a successful future.”


Fed slashes rates by 0.75%

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Gross mortgage lending falls 22% in November

Gross mortgage lending fell from £18.6bn in October to just £14.6bn in November – a massive 22% drop.The Council of Mortgage Lenders says that in November 2007 almost £30bn worth of mortgages was completed. So year-on-year gross lending is down by a whopping 51%.The trade body says that while there is typically a decline from […]


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