Rock name likely to go from High Street

Oct 17 2007 by William Green, The Journal

THE Northern Rock name is likely to disappear from the High Street in the near future, company chiefs yesterday told MPs.

Northern Rock chairman Matt Ridley said it was of “enormous distress” that the brand name had been damaged and all options were being considered to keep the bank as a going concern. Options include different funding arrangements, as well as either a full or partial sale of the company.

Non-executive director Sir Ian Gibson stressed the company was still in business and wanted to continue – and promised to find the “best solution” for thousands of staff, customers and other stakeholders in the North-East.

But the bank bosses insisted the firm was hit by a “completely unpredicted” chain of events that led to last month’s run on the bank during a tough grilling by the Commons Treasury committee for nearly two hours yesterday.

The company raised much of its funding for mortgages on the money markets, but these froze after trouble exploded in the American mortgage market – which led Northern Rock to seek assistance from the Bank of England.

Northern Rock chief executive Adam Applegarth said the company had already been taking action and only sought support as a “backstop”.

Quizzed about the bank’s name in any take-over, Dr Ridley said: “I think that’s a matter for them, not for us. But it is true to say that on the retail funding side the name Northern Rock is unlikely to continue.

“But it is worth pointing out that on the mortgage lending side all our feedback from our brokers is that they know that we are a good and responsible careful lender and that has not changed.”

A facility with the Bank of England until next February had given time to ensure there was not a “precipitous solution” and keep all strategic options open, added Dr Ridley.

He said Northern Rock had strived to be a good corporate citizen, creating thousands of jobs and the Northern Rock Foundation.

Sir Ian, who is also chairman of Trinity Mirror, owners of The Journal, denied the board was arrogant after committee chairman John McFall said it was time for more “humility” from the bank over its problems.

He said: “There is shock and distress and that is reflected, although there is high morale, in our workforce in Gosforth and in Sunderland. These people are trying damned hard to serve their customers and secure their future and we are very aware of that.”

James Ramsbotham, chief executive of the North East Chamber of Commerce, said: “There has been an increasing recognition in recent days of the strength of support of Northern Rock in the North-East and that the prospect that it can continue as an independent institution.

“The Northern Rock brand has been a tremendous asset to the region and I wholeheartedly believe it can continue long into the future.”

Tyneside MP Sharon Hodgson said: “Whether the current name remains or not, the most important thing is to protect jobs and investment in Tyne and Wear.”

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Offered to resign

NORTHERN Rock bosses offered to resign but were urged to remain to see the bank through its crisis, the Commons Treasury committee yesterday heard.

Tory committee member Michael Fallon demanded to know why bank chairman Matt Ridley had not resigned.

Dr Ridley said he was working “night and day” to turn around the situation, adding: “I serve at the behest of the board and if they think that they can do better by asking for my resignation, it will be available to them.”

Non-executive director Sir Ian Gibson said chief executive Adam Applegarth and Dr Ridley offered to step down during the run on the bank, but shareholders and board colleagues felt it was best for them to stay in place to steer the group through the crisis.

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Standing firm

NEWCASTLE MP Jim Cousins yesterday stood up for Northern Rock as the bank’s directors came under fire. The Newcastle Central MP, and committee member, accused committee chairman John McFall of “grandstanding” during a lengthy session with Northern Rock’s chief executive and several directors.

Mr Cousins, called on Mr McFall to reveal what other banks he had spoken to after the committee chairman questioned the diversification of funding by Northern Rock. Mr McFall refused to answer.