NRock contributing to interbank crisis - New Star

He says the influx of cash received by Northern Rock since nationalisation has caused problems on the interbank lending market, which determines the interest rates on many mortgages. “Other banks benefited from Northern Rock’s woes last autumn, as savers withdrew funds from the troubled lender and redeposited them elsewhere,” he says. “Now, the reverse flow is occurring, with savers lured back by attractive rates and government guarantees and Rock’s mortgage borrowers encouraged to refinance with other lenders.” He says Northern Rock has chosen to funnel the extra cash into repaying its ...