There were four assets in Granite:
■ the seller's share: Northern Rock's share of the mortgages sold to Granite is calculated using a formula based on the redemptions of mortgages in the pool and therefore fluctuates on a monthly basis, but was worth between £4 billion and £6 billion;
■ Reserve Funds. Granite maintains reserve funds worth around £800 million which operate as a cash buffer. The funds are used to pay amounts due on the Granite bonds if interest flows on the mortgages are not sufficient and are replenished by receipts from the mortgages only after such payments are made. They are assets to Northern Rock as, once Granite has paid bondholders, the residual sum left in the Reserve Funds will be paid to Northern Rock;
■ Start up loans. When Northern Rock established Granite it provided start-up funding for the reserve funds outlined above. Each month any excess over what is required to pay interest on bonds and to top up the Reserve Funds is used to repay amounts due on the start up loans;
■ Deferred consideration. When Northern Rock sells mortgages to Granite for cash it does so at par value. In other words it sells £100 of mortgages for £100 cash minus the seller's share. So there is potentially a difference between the amount of interest the mortgages pay over their lifetime and the interest Granite pays to bondholders. The excess of this interest over and above payments to bondholders is payable to Northern Rock and is known as "deferred consideration" for the sale of mortgages to Granite. However, this asset does not build up over time. Granite is structured so that each month any excess interest over what is required to pay interest on the bonds is paid to Northern Rock.