Brussels has expressed its reservations about the restructuring package put forward by the government to save troubled mortgage lender Northern Rock, including fears that state aid is likely to drag on for too long.

The mortgage lender adopted a business plan allowing it to pay off a £26bn Bank of England loan within three years. It was also ordered to halve its mortgage book by encouraging borrowers to switch to other lenders.

The bank has a three-year guarantee that any savings deposited with it will be backed by the government.

The European Commission’s first assessment of the plan, set out in the European Unions official journal, sys it “doubts whether the size and duration of this down-sizing are sufficient to avoid undue distortions…[or] that… a deeper and more rapid downsizing could not be implemented”.

The regulator has particular concerns that the restructuring plan may run for an unnecessarily long period, that the state aid could have been more limited and that more could be done to compensate rivals over distortions to competition.

Lawyers have said that the commission could order the aid to be repaid if it was found to have been given illegally, but the decision on the rescue would be made in the second half of this year.

The chancellor Alistair Darling is said to be “pretty relaxed” about the commission’s assessment of the rescue plan. How relaxed he will remain is debatable as the EU journal does set out significant concerns about its compatibility with EU state aid rules.

Mr Darling’s officials were quick to maintain that the assessment came as no surprise and was simply part of a standard Brussels procedure when launching a state aid enquiry.

The proposed rescue operation was discussed at every stage with Neelie Kroes, the competition commissioner, and her officials before it was put into action insist the Treasury. Northern Rock was taken into state ownership in February.

Publication in the Official List formally triggers a month-long period in which business rivals and other interested parties can submit comments on the restructuring deal to the commission, although some views may have already gone in.

Royal Bank of Scotland and Barclays London offices have been raided by the Office of Fair Trading, seizing documents and phone records, in the latest example of the competition watchdog’s hard-line approach to possible price-fixing.

The documents were taken as part of an investigation in to alleged anti-competitive behaviour over the pricing of loans to professional services firms, people involved in the probe said.

The probe was said to have been triggered by Barclays and comes amid high-profile investigations into price-fixing allegations involving supermarkets, consumer goods companies and tobacco groups. The OFT has confirmed they are in the early stages of the investigation and have a “narrow focus” into allegations of anti-competitive conduct in the financial sector.

RBS confirmed that its office at 280 Bishopgate had been raided and that it was fully co-operating with the authorities. Neither bank would comment, however, on the scale or scope of the material seized by the watchdog.

Barclays claim that members of its professional services team had been approached from outside the bank “in a manner which we regard as inappropriate”. The bank reported the incident on March 17, applying for leniency under rules that allow whistle-blowing companies to escape fines potentially amounting to as much of a tenth of global sales.

Barclays said: “The [OFT] investigation is operating within the confines of the professional services banking area and we believe that, if there is any issue, it starts and stops there.”

The OFT, in the past, used a more aggressive approach to tackling price-fixing, imposing heavier fines and using tough legal powers that allow it to target executives with the threat of up to five years in jail.

Only last year British Airways were fined a record £121.5m by the OFT for fixing the prices of passenger fuel surcharges. BA’s co-conspirator, Virgin Atlantic, applied for leniency and escaped a fine.

Banks are under increasing pressure from competition authorities in areas such as overdraft fees. The competition Commission is expected to publish a report later this week that will accuse leading banks of profiteering in the provision of loan insurance.

Bradford and Bingley shares have dropped dramatically this morning after the UK’s biggest buy-to-let mortgage lender warned the downturn in the housing market will hit profits this year and that it had secured investment from US private equity firm Texas Pacific Group (TPG) to shore up its finances.

This morning the sale of a 23 percent stake to TPG for £179m was announced alongside a restructuring of B&B’s rights issue, which will see the Yorkshire-based banks raise a further £258m from its existing investors.

Shares will be offered to investors at 55p each. B&B shares were initially suspended and were down 20 percent at 70p when trading resumed shortly after 8:10 this morning.

The deal with TPG is an unprecedented intervention by a buyout firm to help bolster a UK banks finances, and will involve a redrawing of B&B’s controversial rights issue.

“The last few weeks have been challenging for Bradford & Bingley, and this is a disappointing trading update reflecting a more difficult market environment,” Rod Kent, B&B’s executive chairman said.

Analysts have said that B&B’s profit warning will heighten fears of an implosion in the buy-to-let mortgage sector as the housing market deteriorates, and raise the spectre of a buy-out by a rival.

The UK bank was forced to take the extreme measure because its existing rights issue, which was offering shares at 82p each, looked to fail. Plans for the rights issue were initially denied by B&B and investors appeared to reluctant to take the offer up given the state of the UK housing market.

B&B said today that profits will be lower for the financial year, confirming investors’ fears, after it slumped to a pre-tax loss of £8m in the first four months of the year. Its arrears jumped from £23m to £36m.

“B&B has a trading problem. It’s a desperate move, but should ultimately instil some confidence in the company,” said one analyst. TPG’s move might be interpreted as a sign that the worst is over, he said.

Adding to the drama of today’s announcement, B&B’s executive chairman Mr Cranshaw is stepping down due to a “serious cardiovascular condition,” with immediate effect. Rod Kent, B&B’s chairman, will serve as executive chairman until Mr Cranshaw is replaced.

Collins Stewart analyst Alex Potter said last week that the worsening conditions at B&B will have had a significant impact on the rights issue.

Mr Potter said that even if UBS and Citigroup were left carrying the Bradford & Bingley rights issue stock, it would be unlikely to tarnish the Royal Bank of Scotland’s £12bn rights issue or the £4bn issue by HBOS, the owner of Halifax and Bank of Scotland.

MPs were warned yesterday that Northern Rock could take even longer than planned to repay its £24.1bn debt to the government if the UK is hit by a recession or a housing slump.

The Newcastle bank, which was nationalised in February, is intending to repay its entire loan from the Bank of England by 2010 and to relinquish its government guarantees by 2011.

Northern Rock’s finance director, Ann Godbehere, signaled that the bank’s business plan could be thrown off track if the UK suffered an economic recession or a 1992-style housing crash.

Speaking to MPs at the Treasury select committee she said, “There could be a six-month delay in that scenario”.

The banks executive chairman Rob Sandler told the committee that Northern Rock’s business plan was “not without risk . . . it is a challenging plan in these respects”, before adding that the plan could come under pressure if house prices fell by 5 percent or more.

He went on to say, much would depend on the UK economic outlook, “If we suffer a downturn and this leads to higher levels of unemployment than at present . . . at that point this would place consider-able strain on the ability of the company to deliver the plan.”

Adding: “We have stress-tested the plan against a number of scenarios, including a decline in the housing market comparable to that of the 1990s, and the plan is robust [in] that scenario.”

The bank will review its current business plan in during the third quarter of this year.

MPs asked Mr Sandler whether he believed Northern Rock’s brand was broken to which he replied: “I don’t believe so . . . the results of the exercises [carried out] indicated that the brand whilst damaged is not damaged irreparably.”

He explained to MPs that Northern Rock was trying to shrink its mortgage book by almost half by encouraging customers to re-mortgage elsewhere when their loans end. The business plan was based on 60 percent of customers re-mortgaging away from the bank, but he acknowledged that fewer mortgage lenders were actively seeing new business in the current market, so the actual level of redemptions could be less.

“It becomes more challenging if there are more lenders out there who are not prepared to offer products to borrowers,” he said.

But Mr Sandler acknowledged there was a risk that Northern Rock would be left with riskier customers unable to re-mortgage elsewhere.

He told MPs he planned to keep sponsorships, such as Newcastle United and Newcastle Falcons.

Labour is in emergency talks to renegotiate over £10m of loans from wealthy businessmen to prevent itself running out of money.

The millionaires, most of whom lent money to Labour in the run-up to the 2005 election, are due to be repaid by the party in the coming months but with the party £20m in the red, they are in no position to do this.

The party is holding combined talks with the lenders to find a single agreement that would enable the Labour to stagger the repayments over nine years. Sources on both sides of the discussions have said that an announcement is just weeks away.

The news is just another kick while Gordon Brown is down, after the Conservatives claimed that the PM had “lost control of the Scottish Labour party”. Wendy Alexander, the party’s leader north of the border, defied the prime minister by calling for an early referendum on Scottish independence.

Chief fundraiser for Labour, Jon Mendelsohn, has been leading talks with representatives of the businessmen, who include curry magnate Sir Gulam Noon, property entrepreneur Sir David Garrard, retail tycoon Richard Caring and former chief executive of Priory healthcare, Chai Patel.

Although most of the dozen millionaires who bankrolled Labour in 2005 have accepted the principle of the negotiations, Biotech entrepreneur Sir Christopher Evans openly asked for his money back and was repaid.

If talks succeed and everyone agrees the terms, the loan repayments will be spread up until 2017.
If talks were to fail it may have severe consequences for the ruling party at time when morale is fading fast. Labour’s general secretary, David Pitt-Watson, pulled out of the position last week because he was concerned about an unincorporated association due to the debts of Labour. Ray Collins, a senior figure in the Transport and General Workers Union is likely to take the position.

As Labour struggles to find funds the opposition’s coffers have been filling up. Conservative fund-raising has reached £11.3m in the fourth quarter last year, compared to £5.9m for Labour, who are relying heavily on the unions who gave the party 77 percent of its funding in those three months.

Hate getting up in the morning, jumping in the shower, jumping in the car, rushing to work and clocking in for a full 8 to 10 hour day? What if I told you, you don’t have to do that anymore? What if I told you that it’s possible to change that routine, to get up in the morning, grab a cup of coffee and relax in front of your computer, and get paid for it. Sound good?

Many people are discovering financial freedom working from home, at their own pace. No more 9 to 5, no more bosses on their backs, and you don’t have to wait for that coffee break to enjoy a cup or two. There are so many opportunities available online. You’ll find computer jobs of all kinds. There is data entry, data processing, web building, just about anything you can do on the computer you can get paid for.

This is perfect for stay at home moms that need a little extra income for the family. People on the internet are always looking for help posting their ads, promoting their businesses and advertising their products.

You can even find jobs that require you to express your opinion in certain areas, like shopping information, movie reviews etc. How much of an income you make is totally up to you. You pick the jobs you want, and the hours you’re available to work.

Do you like to write short stories and articles? How would you like to do that for a living? If you pick topics that are interesting to you, you should have no problem writing out an article for the internet.

There’s also rewrites, where you take something that has already been written and redo it in your own words. Now how hard can that be?

Start your own freelance business working from home, doing the jobs you feel comfortable with, in the amount of hours you have available. You can go on the internet, find something you are interested in, make a bid on the job offered, let them know how long it will take you to complete the job and how much you charge. Pick and choose; it’s all up to you.

Advertising your expertise on the web can also be helpful to expand your business and bring in more opportunities, and even more income. Being your own boss, setting your own hours, getting the income you know you deserve, this can be yours.

This isn’t a get rich quick opportunity, it takes time to get started, but it could be a worth while venture. If staying home, working in your pajamas, putting your efforts into working on something you enjoy doing, while being paid for it, is something you may be interested in, then maybe you should hop online and see what’s available for you.

Build your own website, build your own business, and achieve financial freedom. And the best part is, you don’t have to wait for your vacation time, you can take it whenever you want. After all, you’re the boss.

As we steer the good ship “UK Economy” through a bout out fiscal turbulence many experts are expecting to see a major increase in the number of people looking at bankruptcy as an option to escape their financial troubles. But is it really the answer or is there an alternative?

While IVA (individual voluntary arrangements) and Bankruptcy are never the easy choice there are times when it can be difficult to avoid them. Bankruptcy is the one which many people try their best to avoid, the one which still carries something of a stigma. But is it really as bad as they say? Does it impact upon your credit rating forever?

The bankruptcy laws have changed over the last decade and the major problems with bankruptcy many years ago have been reduced. It is not the end of your credit history, it is not the end of the road and it will not see you out on the road with nothing to show for yourself. While it depends how much money you actually owe and whether you can ever see yourself being able to pay it back, a ball part figure from which bankruptcy could be considered would depend on your situation. It could be as little as a few hundred pounds or it could be something well into the thousands of pounds.

Upon taking the bankruptcy route you will be assessed by a Trustee who will be in charge of your case. They will review you situation, what your debts are, lifestyle costs, how much you could afford to pay (if any) and the size of your debt. If you are not in a position to pay they will not push you for payment, although if you have ready assets they have the option of selling some of them off to raise cash. However, there are allowances which will ensure that they will not consider items under a predetermined cut off point. It is not in their best interest to hold you back for years to come – they would much rather draw a line under what you can afford to pay back and advise the courts of this.

Your creditors will be contacted and asked to comment on your case and whether they have any concerns with you pursuing bankruptcy. Unless it was something special they would be highly unlikely to block the bankruptcy hearing if the trustees believed this was the best way forward.

The average bankrupt will be discharged in under 5 years, and while there will still be restrictions to what finance and bank accounts you can open even after you are discharged, these will slowly disappear so long as you get your finances back in order. Bankruptcy is not the easy option, but for more and more people in this day and age it can be the only real option.

A recent report in the UK financial press has indicated that some 25% of the UK population are suffering from unmanageable debt, and with the economic situation set to get worse this figure looks likely to rise substantially.  Are you stuck in a debt trap?

If you are stuck in a debt trap it is essential that you are proactive rather than reactive, and do not leave it too late to sort out your affairs.  Too many people in the UK would rather bury their heads in the sand and hope that all turns out well in the end – the chances of this are minimal!

Unless you tackle your debt problems head on there is every chance that you will get yourself into a situation where you have little control, maybe looking at an IVA solution or Bankruptcy and the problems associated with these situations.  By tackling your debt problems early it may be possible to consolidate your debts into one manageable amount, possibly spread out over a longer time scale. 

While there is no pain free way to “fix” your personal debt problems, the longer you put them off the worse they will get.  A simple call to your credit card company, your bank, etc to alert them to your problems may well yield a lot more useful information than you might expect.  It is in their interests to keep you solvent and keep you from the clutches of either an IVA or Bankruptcy, where they will be forced to write off large amounts of debt.

Do not be scared to admit that you have problems, as this is the first stage of your fight back.  That is not to say that either an IVA or Bankruptcy may not be the best option for you, but either way you will take more control of the situation and relieve some of the pressure in the long term.

With news that Barclays Bank alone will be writing down their asset base by approaching £1 billion – with many expecting the final figure to be above this – many are starting to ask who will pay for this financial mess.  Will the Banks take it on the chin, or will they look for compensation from the consumer?

As you guessed, it will no doubt be the consumer who will pay the price in the end, with Banks arguing that the consumers benefitted when their balance sheets were strong (with better lending terms, etc) and now they will need to pay the price.  While the recent write-off by Barclays, and the others expected to be announced from other UK Banks, will not have a long term impact on the financial strength of these institutions, it has affected confidence in the system on the short term.  This will be the reason the Banks use to increase your charges, notch up your loan interest rates and generally squeeze you for a little extra.

Lets not forget that the UK Banks are also in the middle of a messy court case with regard to overdraft charges and the question of there legality.  They have already shelled out some £570 million in compensation, with potentially billions more at risk if they lose the test case in January 2008.  The Banks have traditionally come down in favour of their shareholders in such situations, looking to replace the lost funds by hitting their customers.  We have seen masses of Bank branches closed down, many systems now automated and a general reduction in free face to face advice.  The consumer is already paying the price for increased competition and risk in the sector.

The bottom line is that even though the main UK Banks have substantial asset bases, and will be relatively untouched by recent events in the long term, they have shareholders to keep happy.  Slowly but surely “free” banking will disappear (if it has not already!), charges will creep up and many more new fees will be introduced.  The next few years will show the value of shopping around for the best deal, with many expecting a general hike in the cost of personal and business banking – you have been warned!

The recent rise in the housing market has seen many home owners sitting on potentially large paper profits, although some people still seem to be up to their eyes in debt.  It seems crazy that many people are being penalised by large debt repayments, or credit card balances which are running away from them, so what can they do?

It obviously depends upon the position you are in with regard to your mortgage, the value of your home and the amount of debt your need to address.  However, there are a number of options open to you including:-

Remortgaging your home to raise instant capital.  The main risk with this option is the potential to miss payments and run short of money, but if you are able to cover the payments at current levels you should be ok as interest rates should come down – or at worst, they are highly unlikely to move higher over the next 12 months.

Part remortgage.  For many people a part remortgage may well be the best solution, but again it depends on how much money you owe, and the amount of equity in your home.  You also need to ensure that you can actually afford the repayments.

Down grade your housing.  This is probably the worst case scenario for anyone who is deeply in debt, taking a profit on their home, paying off their debts and down grading to a cheaper house.  If you are in this much trouble then you probably need to take professional advice.

The idea behind releasing some or all of the equity from your home relates to the difference in interest rates.  While you may be paying in the region of 6% for a mortgage, you may be charged over 10% for your credit card debt.  In this situation it would seem a sensible idea to swap one debt for another, but at a substantially lower rate.

Do not rush into this type of decision as it may have a long term impact upon your life and financial situation – make sure you get it right!