PM wants to save jobs and accounts
Oct 9 2007 by William Green, The Journal
THE Prime Minister yesterday expressed hope that thousands of jobs at Northern Rock can be safeguarded.
Gordon Brown told The Journal he was especially concerned about jobs in the North-East and wanted to see customers holding mortgages and savings with the Newcastle bank protected.
The Prime Minister said he hoped a way could be found to “properly safeguard” workers and customers, but insisted he could not comment on commercial discussions about Northern Rock’s future.
Mr Brown’s comments come after shares in Northern Rock rose amid reports US banking group Citi is prepared to lend the bank up to £10bn to help keep it independent, and speculation on new private equity interest in the bank.
Negotiations are said to be continuing, but a successful conclusion with Citi could put Northern Rock – the country’s fifth-largest mortgage lender – on a more solid footing.
A deal could allow the firm to stop borrowing from the Bank of England at its emergency rate, thought to be about seven per cent, after it was hit by turmoil last month in the money markets, where it raises most of its cash for mortgage lending.
And it is hoped an agreement could stave off large cuts in the bank’s 5,700 workforce, while ministers could avoid the embarrassment of seeing Northern Rock bought for a token sum and major job cuts made.
The Prime Minister spoke about Northern Rock after being asked about what he would do to ensure it would remain a thriving and independent North-East company by The Journal during a Downing Street Press conference yesterday.
He said people were pleased the Government had guaranteed the savings of Northern Rock customers, describing it as a “very important declaration” of insurance for them.
Changes to ensure greater protection to savers in the future were promised by the Prime Minister, who stressed he wanted customers holding mortgages with Northern Rock safeguarded as well.
Mr Brown said: “Obviously, I too am concerned about the jobs of those people, hundreds and thousands of people employed by Northern Rock, particularly in the North-East of the country. And I hope we can work out a means by which the jobs of people in Northern Rock, the savings, the deposits and of course the mortgages of people who have mortgages with Northern Rock are properly safeguarded.”
But the Prime Minister said he could not be expected to say anything more about commercial discussions relating to the bank.
Yesterday the Treasury rejected claims it was vetting potential bids for Northern Rock and insisted it was a matter for the company’s shareholders and board.
Blaydon MP Dave Anderson said the Government had been right to give a savings guarantee, but he wanted to see continued support for Northern Rock to maintain it as an independent group and protect jobs.
“Whatever we can do, we have got to do and there is goodwill there. It is something that should be protected if it can be,” he said.
Northern Rock has already said it is in talks with several parties about a variety of transactions, but yesterday said it would not be making any further comments at this stage.
