Britain to nationalise troubled mortgage lender Northern Rock
Treasury chief Alistair Darling was making a statement on Sunday on the future of struggling bank Northern Rock PLC, amid reports the government plans to nationalise the lender.
By Agencies |
LONDON: Treasury chief Alistair Darling was making a statement on Sunday on the future of struggling bank Northern Rock PLC, amid reports the government plans to nationalise the lender.
A Treasury spokesman said Darling would set out plans for the bank, but declined to confirm whether it would be nationalised.
The British Broadcasting Corp., without citing any source, said Darling would announce a plan to take the mortgage lender into public ownership.
Northern Rock ran into trouble in September because it relied too heavily on short-term money markets instead of deposits for funding. A subsequent profit warning and appeal to the Bank of England for an emergency loan led to the first run on a British bank since 1866.
The government had been in the middle of an auction process to find a private buyer for Northern Rock, with revised bids submitted this weekend from Richard Branson's Virgin Group and an in-house management team.
But lawmakers had warned that nationalization remained a possibility if the bidders failed to meet the government's requirement that more than 25 billion pounds (US$49 billion; euro33 billion) in government loans be paid back within three years.
The government had a deadline of March 17 to chose between the bids and nationalization. That is the date when it must submit a restructuring plan to the European Union for state aid approval.
A Treasury spokesman said Darling would set out plans for the bank, but declined to confirm whether it would be nationalised.
The British Broadcasting Corp., without citing any source, said Darling would announce a plan to take the mortgage lender into public ownership.
Northern Rock ran into trouble in September because it relied too heavily on short-term money markets instead of deposits for funding. A subsequent profit warning and appeal to the Bank of England for an emergency loan led to the first run on a British bank since 1866.
The government had been in the middle of an auction process to find a private buyer for Northern Rock, with revised bids submitted this weekend from Richard Branson's Virgin Group and an in-house management team.
But lawmakers had warned that nationalization remained a possibility if the bidders failed to meet the government's requirement that more than 25 billion pounds (US$49 billion; euro33 billion) in government loans be paid back within three years.
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The government had a deadline of March 17 to chose between the bids and nationalization. That is the date when it must submit a restructuring plan to the European Union for state aid approval.
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