Northern Rock denies financial problems

Updated 22.31 Thu Sep 13 2007

Keywords: Northern Rock, Treasury and the Financial Services Authority

Mortgage lender Northern Rock has taken the "unusual" step of calling on the Bank of England to provide emergency funding.

In a dramatic move, the Bank will give short-term credit to Northern Rock to allow it to carry on operating, according to reports.

Customers are being urged to keep calm, while analysts suggested it could be a result of a short-term cash flow problem sparked by the drying up of the money market

Customers are being urged to keep calm, while analysts suggested it could be a result of a short-term cash flow problem sparked by the drying up of the money market.

The decision was apparently taken after consultation with the Treasury and the Financial Services Authority.

Treasury select committee chairman John McFall said: "I don't think customers of Northern Rock should be worried about their current accounts or mortgages.

"The fact that the Bank is willing to act as lender of last resort should be reassuring, because it means they think the problems are temporary."

The Treasury refused to comment, saying the issue was "commercially sensitive".