Govt lines up boss for nationalised Northern Rock
Monday, 14 January 2008 12:00 AM
The government has drawn up contingency plans for the nationalisation of Northern Rock ahead of the company's extraordinary general meeting tomorrow.
Ministers reportedly hope the threat of a looming takeover will concentrate the minds of shareholders, who have so far failed to accept a private offer.
The government has already secured a new boss for the troubled lender in the event of nationalisation.
This weekend it was confirmed Ron Sandley, who was credited with saving Lloyd's of London in the 1990s, is on standby to act as provisional executive chairman after a government takeover.
Mr Sandler confirmed he had agreed to take the post in the event of nationalisation. He explained his role would be to "get things stabilised, to make sure the bank has proper plans in place".
Vince Cable, the Liberal Democrats' economic affairs spokesman, welcomed the news but said it was a "pity" the government had not acted sooner.
"If it had it would have been possible to manage the exposure of the taxpayer in a much more considered way," Mr Cable argued.
He continued: "If it is indeed true that the government are proposing to proceed with the public ownership option we now need to know very quickly how they propose to do it; how the taxpayers interest will be best protected; what will happen to the small shareholders and what will happen to the operation in the north-east of England."
The government has now leant more than £25 billion to Northern Rock and guaranteeing deposits to at least the same value again.
David Cameron - who has long predicted Northern Rock would be nationalised while refusing to support the option - said yesterday public ownership would be "the most complete humiliating failure for the government".
It is understood ministers still hope a private buyer can be found for the bank, with both Sir Richard Branson's Virgin Group and private-equity group Olivant interested in the lender.
Newsletter sign up