any comments, thoughts, on this stock.

UK financial system still at risk - BoE
AFX


LONDON (Thomson Financial) - The Bank of England has warned that the UK's financial system, still in shock from the run on the Northern Rock PLC bank, is not out of the woods yet despite the uneasy calm in financial markets at the moment.

In its half-yearly report on financial stability, the central bank conceded that the risks to the financial system have increased in the wake of this summer's turmoil in world markets and added that urgent reform of the country's crisis management arrangement is needed.

'There have been signs of recovery in recent weeks but some markets are still illiquid and the financial system remains vulnerable to further shocks,' said BoE deputy governor John Gieve, who has been accused, not least by members of the Treasury Select Committee, of being asleep at the wheel.

The BoE, which has come under fire for its handling of the liquidity crisis and its failure to provide early funding to credit markets, noted a number of risks that could end the current calm in some financial markets.

It noted that the structure of institutions' balance sheets and their funding in particular are more fragile that before, while ongoing uncertainties about the valuation and location of exposures mean that financial market expectations are vulnerable to further shocks.

Key ongoing risks identified include the US housing market, the US asset-backed commercial paper markets, the impact of the summer turmoil on the balance sheets of financial institutions and higher funding costs in wholesale markets at a time of substantially greater funding needs.

The latter, the BoE said, 'could expose fragilities among a small, but growing, cohort of more vulnerable non-financial borrowers, such as UK subprime borrowers and highly leveraged companies, including those that have been the subject of recent buyouts'.

Other downside risks, which have not surfaced in recent months, could come from the commercial real estate sector, equity markets across the world as well as a sustained slide in the dollar, it added.

The impact of all these vulnerabilities, were they to crystallise in the near term, is judged now to be greater than in the past, given the current fragility of confidence and continued tightness in wholesale funding markets.

The BoE added that vulnerabilities in the household sector, particularly from recent first-time buyers and buy-to-let investors, and in the corporate sector, particularly for leveraged firms taken private and commercial property companies, could be exposed by tighter credit conditions.

Ultimately, the BoE said the financial system could emerge stronger from the repricing of risk especially as the economic outlook remains 'robust'.

It said identifying and promptly addressing weaknesses that have emerged are critical to rebuilding and strengthening the system.

Though it is too early to make a full assessment of this summer's disruption in the markets, the BoE said some lessons need to be learnt including the need for improved management of liquidity, more transparency in the composition and valuation of structured products and banks' exposures to off balance sheet vehicles, and better stress testing and contingency planning.

Specifically for the UK, the BoE conceded that the authorities need to strengthen their crisis management arrangements.

It noted that tools used by authorities in other countries, such as a special insolvency regime for banks, are not available in the UK and that the existing deposit insurance system is not good enough.

In addition, the BoE said the run at Northern Rock 'brought home the danger' that support from the central bank may 'stigmatise' a bank and 'reinforce a loss of confidence, rather than allay it'.

pan.pylas@thomson.com

Al. getting pummelled

RAB Capital says now holds 6.66 pct of Northern Rock UPDATE




(Recast lead, adds detail)
LONDON (Thomson Financial) - RAB Capital PLC, the UK hedge fund, said it now
holds a 6.66 pct stake in beleaguered mortgage lender Northern Rock, compared
with its previously disclosed holding of 6.05 pct.
In a statement, RAB said it sold a net 100,000 Northern Rock shares in two
separate contracts for difference trades on Wednesday, leaving it with a 6.66
pct stake.
The hedge fund had earlier built up its original holding to 6.90 pct through
derivative transactions that were not disclosed, market sources said.
RAB's initial purchase of a 6.05 pct stake, announced on Sept 20, marked a
rare show of confidence in Northern Rock's prospects just one week after the
lender revealed that it had been forced to seek emergency funding from the Bank
of England.
By 3.50 pm today, Northern Rock shares were up 7.14 pct at 194 pence,
fuelled by continued hopes of an early rescue bid for the group.
According to a report in the Daily Telegraph, Northern Rock has opened its
books to US private equity firms JC Flowers and Cerberus, while Spanish
newspaper El Mundo said Nueva Rumasa, the investment vehicle of businessman Jose
Maria Ruiz-Mateos, is interested in acquiring a 10 pct stake in the bank.
Northern Rock declined to comment.

RAB founder welcomes more transparency
By Mark Kleinman in Hong Kong
Last Updated: 1:29am BST 25/10/2007



Philip Richards, head of Northern Rock's biggest shareholder, says the best solution for the bank would be the least newsworthy one

Listening to the head of one of London's biggest hedge funds publicly welcoming closer scrutiny of the industry would not long ago have seemed about as likely as hearing Formula 1's prodigy Lewis Hamilton broadcasting a request for Spanish lessons while draped in the Finnish flag.

But Philip Richards, a former Army officer who has amassed a fortune as the co-founder and chief executive of RAB Capital, can usually be relied upon to stand out from the crowd.

advertisementAs the lift rose past the floors of the Island Shangri-La hotel in Hong Kong faster than the climb in RAB Capital's share price since it floated on London's Aim market, Mr Richards had little trouble explaining just why he was hurrying to the launch party for his company's first office outside London.

"I'm the R in RAB," he told a partygoer unfamiliar with the man who has helped construct a firm with nearly $7bn (3.4bn) under management in a little over eight years.

Mr Richards's is not a face that many of his fellow hedge fund executives would fail to recognise particularly at the moment. In recent weeks he has launched a series of excoriating attacks on what he sees as the deplorable actions of a number of funds which he believes helped incubate panic at Northern Rock by shorting the stricken mortgage bank's shares. RAB has become the largest shareholder in Northern Rock with a 6.66pc stake.

A new code of conduct for hedge funds is likely to represent one of a number of steps designed to overhaul the transparency of international financial markets in the months ahead. Mr Richards is quite clear that such a move is welcome.

"We have always operated our funds in a clear and open manner. We have nothing to fear from greater regulation. We are a plain vanilla firm."

There has been nothing so anodyne aimed by Mr Richards at the Bank of England in recent weeks over its handling of the Northern Rock crisis.

"I would contest the view that the Treasury wants to see shareholders wiped out. Both they and the Bank of England want to see Northern Rock survive," he said. "It has a good-quality loan book, and it should not fail because of a crisis in the system caused by the non-intervention of the Bank of England in the interbank market."

Mr Richards said he had no preference for either of the competing offers that look like transpiring, from Sir Richard Branson's Virgin Money, and from Christopher Flowers' JC Flowers, for the Newcastle-based bank. Others may yet emerge from the shadows.

"The best solution is a non-newsworthy one, which is that Northern Rock gradually recovers."

That may seem an unlikely prospect, but most of the rest of Mr Richards's wish-list has been delivered during an unarguably stunning period of growth for RAB.

The performance of its special situations fund, for which Mr Richards is responsible, has been partly predicated on its shrewd amalgamation of investments that leverage China's stellar economic growth.

Now, following last year's acquisition of the Asia-focused Northwest and a more recent deal to buy the Hong Kong-based fund Pi Investment Management, RAB is pitching its tent in one of the world's fastest-growing regions for hedge fund investors. This week, the firm said it may double its assets under management in the Asia region to $2bn within the next year or so. Further acquisitions are likely to follow.

"In 2001, we had just emerged from the tech bubble, and my view was that China would be the most significant global growth story of the next two decades," he said. "I thought 'let's buy all the stuff that China needs'.

"I do not see any serious wobbles in the China growth story. It may not grow as fast as it has been doing, but there are still 30m people every year moving into the cities."

Mr Richards, who continues to wrestle with the big picture for RAB, has been well rewarded for RAB's success: he is understood to have earned about 19m last year. But he is known, like many of London's other "philanthropreneurs", for giving much of his income to charity.

He now has plans for a dedicated mining fund which will be launched in the coming weeks, and there are other industry-specific funds ("pharmaceuticals may be an opportunity") that may spark his interest.

He also maintains that the issue of RAB's continued listing on Aim and whether a move to graduate to the main London market would be in the company's, and shareholders' interests is under review.

"The board discusses it regularly. There is no one catalyst for moving it at the moment."

Tonight: File On 4. at 8pm Radio 4.

Robert Preston investigates who was to blame for the crisis at Northern Rock. Featuring an interview with Merwyn King, his first public interview about NR.

Could be interesting.

Come on people lets not forget that without the BoE bailing this one out it'd be in administration right now, lets not also forget whos to blame. If you wanna put your money on a failed business model and board then go ahead but I'd rather be out of it and and in with the bulls on plenty of other stocks!! Might as well now that you could almost call NRK a nationalised company merge it with the post office which I think would add more value than any possible takeover or consortium.... Just a lone investors view..... Sound like cynic also now....

well Cynic is very happy being short with guaranteed stops in place so in worst case will be just + side of break even

Good for you cynic, I too have adopted the short on this one, shame the volumes and volitility have dampened over past weeks.

some strange happenings in NRK on which tomorrow may well shed some light ..... sp seemed to close at 157, but in the last hour or so (its 18:30) it looks to have been marked down to 152 ..... yetr there does not seem to be a late annoluncement either

Northern Rock savers have withdrawn 10.5 bln stg - report
AFX


LONDON (Thomson Financial) - Savers at troubled Northern Rock PLC are believed to have withdrawn a total of 10.5 bln stg since it appealed for emergency funding from the Bank of England in September, according to a sales document sent out by the bank to potential buyers, reports the Daily Telegraph.

ben.deighton@thomson.com

and i have increased my short yet again

Is it time for the deck chairs!

not sure, but singing "Abide with me" may not be far away

Sunday Times reports that Abbey are close to mounting a rescue bid involving resuscitating the whole ...... while this certainly has credibility, the question still remains as to by how much the equity will have to be diluted ...... we all saw what happened with Eurotunnel sp, which surely is a fair parallel

So I guess Northern Rock will fall further...I had shorted again at 160p. You had done better, cynic - shorted at 215p if I remembered rightly...although I shorted at 260p and came out at 220p...nerves got me then.

quite hard to call ..... there could be a significant bounce if bears start to close, but i still question whether that can be sustained ..... anyway, having pondered, I shall just stay put with my guaranteed stops in place ..... then i shall just break even at worst ..... fyi, i started shorting at 214, but have done similar numbers all the way down to 147 ...... still not exactly a huge number, but will do quite nicely even if i bailed out now, and very nicely indeed if sp ultimately falls away to say 50p, which i would have though was a distinct possibility, even if Abbey do mount a successful operation.

whoever bidding for NRK would not offer a generous price for it.

clearly everyone is bewildered as me as to what this new development actually means .... indeed from what i have read Olivant (Abbey) says he will only take a significant minority stake and not buy the whole ..... as to be expected, sp shot up this morning to 161 but has now come back to 155 and still drifting

Money won't disappear. It will change hands and increased as printed by the central banks. SEE HERE
China October Trade Surplus Hits Record
Monday November 12, 7:16 am ET
By Joe Mcdonald, AP Business Writer
China's Trade Surplus Jumps in October to New Monthly High of $27 Billion

BEIJING (AP) -- China's trade surplus jumped to a new all-time monthly high in October, according to official data released Monday, despite government pledges to restrain export growth and adding to pressure for action on trade barriers and currency.

ADVERTISEMENT
The report comes amid demands by some U.S. lawmakers for sanctions if Beijing fails to ease currency controls. The European Union says it also will press China for action at a summit this month.

China's trade surplus for the first 10 months jumped a massive 59 percent to $212.4 billion, according to figures released by the General Administration of Customs. The annual surplus already has surpassed the full-year record of $177.5 billion set in 2006.

October's trade gap rose to $27 billion, up 13.6 percent from the same month last year, according to the customs data. The previous monthly record high was $26.9 billion in June.

Chinese leaders say they are not actively pursuing huge surpluses and have imposed new taxes to restrain exports of steel, plastic and other goods deemed too dirty or energy-intensive.

Foreign demand for low-cost Chinese goods has stayed strong despite a string of foreign recalls and warnings over faulty or tainted Chinese goods ranging from toothpaste to tires.

The surge in import revenues has strained the government's ability to restrain pressure for prices to rise. The central bank drains billions of dollars a month from the economy through bond sales, and has piled up the world's biggest foreign reserves at $1.3 trillion.

China's trade surplus with the United States rose 12 percent to $15.7 billion on total two-way trade of $26.7 billion, according to the customs agency.

U.S. lawmakers are working on several proposed measures to impose punitive tariffs on Chinese imports if Beijing fails to take action on its currency controls.

The United States and other trading partners complain that China's currency, the yuan, is kept undervalued, giving its exporters an unfair price advantage and adding to the country's surpluses.

The surplus with Europe, China's biggest trading partner, rose nearly 50 percent to $13.9 billion on total trade of $31.4 billion, the agency reported.

A European Union delegation led by Prime Minister Jose Socrates of Portugal, which holds the 25-nation group's presidency, will press Chinese leaders for action to ease trade barriers and to let the yuan rise faster in value, EU Ambassador Serge Abou said Monday.

The comments reflected Europe's growing official urgency about China's swollen trade surpluses, an area where Washington has taken the lead in the past on lobbying Beijing.

China's imports in October climbed 25.5 percent from the same month a year earlier to $80.7 billion, according to the agency. Exports grew by 22.3 percent to $107.7 billion.

The United States reported a $232.5 billion trade deficit with China last year, its biggest ever with any country. The gap this year is on track to surpass that.

For the first 10 months of the year, China's total exports grew 26.5 percent to $985.84 billion, while total imports rose 19.8 percent to $773.48 billion.

i am sure ahoj's post above is rivetting ...... meanwhile, after yesterday's preliminary excitement, the market is clearly having 2nd and 3rd thoughts, so after a high of 161 yesterday, sp has drifted back down to 153 and continues it path through life (towards death?) like a leaky balloon.