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Rock borrowing - the facts

• Robert Peston
• 30 Nov 07, 08:08 AM

You鈥檒l have read around the place this morning that Northern Rock has now borrowed almost 拢30bn from the Bank of England.

That鈥檚 wrong. The Rock has in fact borrowed just over 拢25bn from all of us in the form of taxpayer-backed loans.

How do I know? Errr. Well I鈥檝e been told by a couple of people I trust.

But it would be equally wrong to point fingers at the journalists who have printed the inflated erroneous number.

Because they have done a perfectly sensible calculation.

More importantly, the Bank of England 鈥� as a point of principle 鈥� is refusing to correct or guide journalists. And the Rock has been prohibited by the Bank from correcting them.

One Rock executive said to me that there was absolutely nothing he or his colleagues could do to prevent the press reporting exaggerated numbers on the Rock鈥檚 borrowing from taxpayers.

Why won鈥檛 the Bank of England be more helpful?

That鈥檚 very unclear.

But you may be able to draw your own conclusions if I explain how journalists have been obtaining these numbers.

The first thing to do is click on .

That takes you to a page on the Bank of England鈥檚 website called the Bank Return.

On that page the bank鈥檚 weekly balance sheet is published.

Now click on the Banking Department鈥檚 balance sheet for September 12 鈥� or the day before the Rock went cap in hand to the Bank of England for emergency help.

In the bottom right hand corner is a category of assets called 鈥渙ther assets鈥� 鈥� and its value is 拢13.1bn.

Now click on the Banking Department鈥檚 balance sheet for November 28. There you鈥檒l see that the value of 鈥渙ther assets鈥� has shot up to 拢42.3bn.

What we know is that the Rock loans are in that category of asset.

And if you assume 鈥� which is what journalists have done 鈥� that all the increase in the value of that asset is represented by Rock lending, then current Rock lending by the Bank of England would be 拢42.3bn minus 拢13.1bn. Which is 拢29.2bn.

But it鈥檚 a false assumption.

There were other kinds of loans in that 鈥渙ther assets鈥� category before the Rock debacle and there are other kinds of loans now.

So not all the increase is down to the Rock.

But what are those loans?

Well, I haven鈥檛 a clue. And the Bank of England won鈥檛 say.

Inevitably, its silence has fuelled the conspiracy theories, even within the Rock itself 鈥� whose executives have persuaded themselves that other banks must be in receipt of secret emergency help from the Bank of England, which somehow it has managed to keep quiet.

It seems unlikely to me that would be the case.

But I can鈥檛 be certain because the Bank of England won鈥檛 say.

It鈥檚 all a bit odd and troubling.

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