NBSR Newcastle 125/8

    RNS Number : 4581K
  Newcastle Building Society
  19 December 2008
   

    07:00, Friday 19 December, 2008

    Issue of Debt

    Newcastle Building Society today announces it has boosted its capital through the issue of �10m of Permanent Interest Bearing Shares
(PIBS). The PIBS have been issued on a private basis.
    
The issue of the PIBS was made given the expectation of the Society experiencing exceptional write-offs resulting from its exposures to
Icelandic banks. The Society's gross exposure to these banks, before set-off positions and recoveries, is �43m. In order to ensure that
Members' interests are protected, the Board has assumed only nominal recoveries for capital planning purposes. In the view of the Board,
this approach is conservative and leaves the potential for further improvements to capital if recoveries are made and/or set-off achieved. 

    The Society's total capital base is very strong; with Tier 1 capital levels being approximately 10% even after absorbing these
exceptional losses, leaving the Society well capitalised. Moreover, further to the announcement made by the Chancellor on 8 October about
the Government's recapitalisation scheme, the FSA has reviewed the Society's capital position and is satisfied that it has the capital and
strategic plan in place that would be necessary if the Society were to apply for access to the Government's recapitalisation and guarantee
schemes. 

    Both the capital raising and the background circumstances have been discussed fully with the FSA and those agencies that provide ratings
on the Society, Fitch and Moody's, before their recent ratings announcements.

    The Society will make an underlying operating profit for 2008; however, due to the exceptional circumstances already identified in this
announcement, it will post an overall loss for the year.

    ENDS

    For enquiries please contact:
    Nicola Green, Corporate Communications Manager, Newcastle Building Society, 07917 388 329

This information is provided by RNS
The company news service from the London Stock Exchange
 
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