Northern Rock CEO makes statement
Tuesday, 18 Sep 2007 12:27
As Northern Rock dominates national headlines, the bank’s chief executive has moved to address customer distress in a statement of apology published in newspapers today.
On Friday, the Bank of England (BoE) agreed to offer an emergency support facility to Northern Rock, in an unprecedented move to stabilise the country's fifth largest mortgage lender which is said to be experiencing "short-term liquidity difficulties".
This sent shock waves across the country as savers rushed to withdraw around £2 billion worth of deposits.
Mr Darling’s announcement today that the BoE will also underwrite all existing savings and provide 100 per cent coverage for any losses incurred should the lender claim insolvency has gone some way to ease the state of tension.
But consumer confidence in financial institutions still remains in jeopardy.
In an effort to rebuild the faith, Northern Rock’s CEO Adam J Applegarth today offered customers “his sincere apologies for the anxiety and inconvenience caused” over the past five days.
Mr Applegarth assured: “We are open for business as usual. We remain a well-managed company and continue to be a safe place for your savings, loans and mortgages.
“The simple fact now is that the chancellor has made it clear that all existing deposits in Northern Rock are fully backed by the BoE and are totally secure during the current instability in the financial markets.
“We are all working night and day to provide you with the service that you expect from us and deserve from us.”
The controversial CEO offered an incentive for customers who had abandoned the company, saying those who had been charged for withdrawing investments would be refunded if “they re-invest the same amount in the same type of account by 5 October 2007”.
Mr Applegarth has been heavily criticised over the weekend for orchestrating an irresponsible business strategy in an attempt to take a greater percentage of the mortgage market.
Financial commentators have claimed that relying too heavily on a single aspect of the market made Northern Rock particularly vulnerable to the ripple effects of the sub-prime mortgage crisis in the United States.
The chancellor has continued to defend the company, claiming it has a strong lending history and remains a stable prospect for consumers.