Northern Rock weighs up full NYSE listing

NORTHERN ROCK, the building society turned bank, said yesterday it was seriously considering going for a full New York Stock Exchange listing after receiving indications that there was a strong appetite for the institution's paper among American investors.

The mortgage bank, which kicked-off the financial sector's half-year reporting season with a 4 per cent rise in pre-tax profits to pounds 111.5m, is preparing a debut pounds 500m securitisation issue later this year. This follows Northern Rock's success in raising pounds 1.2bn in wholesale funding in the US and Europe earlier this year.

Bob Bennett, finance director, said the bank was particularly encouraged by investor reception for their $750m medium-term note programme. "We could have done double that amount. We are moving towards a wholesale funding structure.

"US investors told us they liked what we are doing but would take even more if we had a full SEC [Securities and Exchange Commission] listing. We are in the process of deciding whether to go for a full listing. It is a real possibility that that is the direction we will go."

Mr Bennett stressed that the move towards greater reliance on wholesale market funding would help the group gain more business in the mortgage market. But it was not, he said, a sign that Northern Rock was turning its back on the traditional deposit market.

Nevertheless, he accepted that concerns about the impact of new entrants such as Egg, the Prudential's new savings and mortgage vehicle, were justified.

Northern Rock's shares have underperformed the banking sector by about 30 per cent this year, reflecting concern about its competitive position. The bank, the smallest of the quoted mortgage banks, is also doggedly independent.

In 18 months the deposit margin on retail savings has fallen by 20 per cent. "At this rate the margin will be zero in four years. That is unsustainable," said Mr Bennett.