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Wednesday 03rd of December 2008

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January 11, 2008

Northern Rock nationalisation may be unavoidable

by Gill Montia

Story link: Northern Rock nationalisation may be unavoidable

The Chancellor or the Exchequer, Alistair Darling, has warned that nationalisation of Northern Rock could be unavoidable.

Appearing before the Commons Treasury Committee yesterday, the Chancellor stated: “I want to find a private sector solution if that is at all possible. It may not be possible.”

Mr Darling has imposed a deadline of 29th February to settle the future of the bank and has admitted: “We are reaching a stage where we have to come to a conclusion one way or another.”

The worst outcome for shareholders would be if Northern Rock is forced into liquidation and then nationalised.

Meanwhile, Goldman Sachs, which is advising the Government on the sale of the bank, is reported to be working on a funding strategy that includes issuing bonds to re-coup some of the £26 billion owed by Northern Rock to the Bank of England.

Finally, the Financial Services Authority (FSA) will not be publicising its internal review into the Northern Rock crisis, although it will publish its conclusions.

The FSA’s chief executive, Hector Sants, has explained that some details will be held back to protect the legal rights of FSA staff and the confidential nature of material relating to other banks that is used by the reviewers for comparison purposes.

 

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