Monday 21st January 2008
Northern Rock could fall into public hands if no satisfactory private deal is achieved, it has emerged.
In a statement issued this afternoon, the financial services industrys tripartite authorities - comprising the Bank of England, Financial Services Authority and HM Treasury - outline the plans for rescuing the troubled lender.
These focus mainly on the prospect of a private transaction which would see Northern Rock come under new ownership in its entirety.
Northern Rock notes that this could be the best option, both for the public and for its shareholders, with proposals already on the table from a consortium led by Sir Richard Branson.
"The board welcomes the tripartite authorities confirmation of their preference to reach agreement on a private sector solution for the company," the lender said in a statement.
It added that this "meets the tripartites previously stated objectives to protect taxpayers, consumers and to promote financial stability".
But any such deal is subject to approval by the regulators - and if a suitable buyer cannot be found, nationalisation is the alternative.
The tripartite authorities explain that public ownership would be a temporary measure until Northern Rock could be brought back to liquidity.
"An experienced and professional management team would be appointed," the authorities assert - adding that existing customers would continue to receive the same service currently provided by Northern Rock.
Branches and call centres would remain open, as would postal and internet banking - and the authorities reassure existing customers that their deposits remain protected in full should the business fail.
A deadline of February 4th has been put in place for private takeover proposals to be submitted, after which the tripartite authorities are to reach a verdict as to the best way forward for the lender.
©
