Northern Rock's chairman speaks

Nov 2 2007 by Adrian Pearson, The Journal

THE new chairman of Northern Rock has warned jobs cannot be guaranteed as the bank heads towards an “increasingly likely” sale.

Bryan Sanderson yesterday authorised the bank to send out information packs to any potential bidders and warned it was unlikely that any future sale could go ahead without some reduction to the 5,700 workforce employed across the region.

The new chairman, appointed after Matt Ridley left the company in October, said Northern Rock could be more than £25bn in debt by the time the Government aid dries up in February.

And while he praised the work done by the Northern Rock Foundation, he could not offer any guarantees on its future.

Speaking exclusively to The Journal, Mr Sanderson said the bank was considering all options – including selling up or remaining independent.

He said: “When you owe £20bn to the Bank of England then all the options have to be looked at.

“I’m here to make sure the shareholders are looked after in the best way and we want to examine every option. The debt is not quite £20bn just yet but it’s getting there and it could be as much as £25bn by February.

“We don’t know yet if there is an independent future for the bank. We have to wait and see.

“Was it avoidable, I just don’t know. There does seem to have been a perfect storm.

“If a few little things had been different this might never have happened.

“So what we are doing with the help of the advisers is prepare an information background pack which will go out to those who want it and then we will start talking to a lot of people who we hope are going to come up with various propositions.

“If the company is sold does it necessarily have to involve job losses? Well it’s very hard to answer because we don’t know what any potential buyer will do with the bank.

“It could be they run it as it is and there are minimal changes but on the other hand that is not the most likely outcome.”

Mr Sanderson later added that safeguarding jobs was not his priority at the bank.

He said: “I think the answers to job losses depend on the offers. At the moment we are just not filling vacancies, which reduces the work force by 600 a year, and that is helpful.

“All I can reasonably say about staff security is we will do the best we can and try to keep them as informed as we can during negotiations.

“We are right at the very front stage of negotiations right now, we have done an analysis, we have created a memorandum of where the company is and now we have to see what sort of reaction we can get right now and what propositions we get.”

In a revealing interview County Durham born Mr Sanderson said he was proud to be working for a North-East company with a track record of commitment to the region.

But he could not offer any firm security on the future of the Northern Rock Foundation, which receives 5% of the bank’s annual profits to donate to good causes in the region.

He said: “The Foundation is fantastic with an unparalleled track record in its department.

“It has rights to do with its 15% shareholder status which will be honoured but I can’t say any more on its future at this stage. As you can tell it is very hard to give any guarantees or predict what will happen.”