SHARES in two major mortgage banks soared yesterday after they reassured investors that they are not set to follow in the footsteps of Northern Rock.
Alliance & Leicester (A&L) and Bradford & Bingley (B&B) said in trading updates they have secured funding to see them through to next year, saying that they had a sound funding platform and healthy retail deposits.
B&B's shares shot up in early trading to around 320p, but settled just 0.25p higher at the end of the day at 303p, while A&L saw its share price grow yesterday by almost 8 per cent, or 50.5p, to 686p.
Fears had been raised that they may have been struggling to raise funds in the credit crunch and could have also been forced to borrow cash from the Bank of England.
The statements turn up the heat on Royal Bank of Scotland, which has been under increasing pressure to reveal its own standing. It is due to release a trading update next Thursday. B&B expects 2007 underlying profits in line with market hopes and A&L said it would beat expectations, although the performances exclude a combined total of £137 million written off so far on investments such as mortgage-backed securities, whose values plummeted in the summer credit crunch.
Steven Crawshaw, B&B's chief executive, said: "We have taken the view that we should take our funding when we can and we got in with some early funding deals when the windows were open, so we are padded up for a long haul."
But analysts said that despite a short-
term rise in share prices, the long-term outlook for mortgage banks in 2008 was likely to remain gloomy.
A&L added that it had maintained strong assets and growth despite "unprecedented conditions" in financial markets.
