N. Rock to be nationalised
(19 February 2008 – UK) The British government has decided to nationalise Northern Rock bank after five months spent trying to find a private sector buyer for the struggling lender.
Britain's fifth-largest mortgage lender has borrowed 25 billion pounds ($A54.6 billion) from the Bank of England since its funding model collapsed late last year.
British finance minister Alistair Darling, said that nationalisation would be temporary and the bank would be returned to the private sector when markets stabilised.
He added that he believes market conditions will improve and that Northern Rock's mortgage book is good and it would be a mistake to abandon the asset and take a loss now.
He also noted that the Government had to intervene, because if Northern Rock were to fail, there was every chance the problems would have spread into the wider British Banking system.
The government will put forward legislation to take the bank into public hands, which is the first major nationalisation in Britain since the 1970s.
Two consortiums made offers for the bank in the past week. However, Darling believed that the offers were not good value for money for the taxpayer.
Both the opposition Conservatives and the UK Shareholders Association have opposed the move.
British finance minister Alistair Darling, said that nationalisation would be temporary and the bank would be returned to the private sector when markets stabilised.
He added that he believes market conditions will improve and that Northern Rock's mortgage book is good and it would be a mistake to abandon the asset and take a loss now.
He also noted that the Government had to intervene, because if Northern Rock were to fail, there was every chance the problems would have spread into the wider British Banking system.
The government will put forward legislation to take the bank into public hands, which is the first major nationalisation in Britain since the 1970s.
Two consortiums made offers for the bank in the past week. However, Darling believed that the offers were not good value for money for the taxpayer.
Both the opposition Conservatives and the UK Shareholders Association have opposed the move.
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