Keeping jobs is not top priority

Nov 2 2007 by Adrian Pearson, The Journal

High praise for region from new chairman

NEWCASTLE and the North-East should continue to be the home of Northern Rock and other large companies, Mr Sanderson said.

“I think London has become the centre of the world’s financial industry and that has generated other growth. We have Edinburgh and Leeds and other places coming up and Newcastle is a potential beneficiary of all this.

“London needs to spread out and that is good for the region. There are a lot of things outside the heartland of global finance which are better and more attractively done outside of London because of the difficulties of finding housing or high quality staff in London.”

The chairman’s praise for the region was backed by the business community.

Liz Smith, assistant regional director, of the CBI North-East said: “The region is home to many successful businesses which compete on a national and international scale.

“There are many benefits to business of being headquartered in the North-East and the region offers a great quality of life for those located here.”

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The clock is ticking on bank’s future

NORTHERN Rock has until February to find a buyer or prove it can survive on its own.

In February the bank’s essential Government aid dries up – and with a likely debt of £25bn the bills will soon start coming.

Mr Sanderson said he was aware that there was a “ticking clock” on the future of the bank.

He said: “If the outcome is a sale it will hopefully be well on its way to completion by the February deadline.

“February provides the incentive, the clock is ticking away and it is a target date to get this resolved.

“Once the state aid runs out it then becomes illegal under Brussels legislation for any more funds to be given and we would instead have to apply for EU aid.

“After six months’ emergency period it becomes illegal for the Government to give preferential aid to an individual company.”

Mr Sanderson added that the February deadline would not affect the Government assurances given to savers with the bank.

Savings of up to £35,000 will continue to be fully covered by new Government measures brought in after the run on Northern Rock threatened to bankrupt the company.

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Reports of debt may have been exaggerated

NORTHERN Rock’s debt may have been massively over-estimated by the national media.

The BBC last night announced the bank had borrowed £23bn from the Bank of England in emergency funding since the crisis started.

However The Journal has been exclusively told by new chairman Bryan Sanderson that the debt is “not quite at £20bn.”

Sources at the bank say the figure quoted by the BBC is not entirely connected to Northern Rock. The BBC arrived at its figure by adding up the total increases in the Bank of England’s weekly consolidated statement, minus the starting point before the run on Northern Rock.

Yet the Bank of England has never officially announced that the “other assets” figure is entirely the Rock’s.

The remaining £3bn could be money secretly borrowed by other banks, a similar arrangement to that which Northern Rock originally requested.

The Bank of England said they would not reveal any bank’s borrowing.