Private ‘sale is still in frame’
Jan 14 2008 by Paul James, The Journal
NORTHERN Rock bosses last night insisted they were still working towards a private sale of the bank, despite mounting speculation that the bank would be nationalised.
City analysts predicted the Government could take the Rock into public ownership as soon as tomorrow after it emerged the Treasury had signed up a leading City troubleshooter to take charge in the event of bank’s nationalisation.
But last night Brian Giles, Northern Rock’s communications director, said bosses were still working towards a sale by the previously announced February deadline.
He said: “As far as the company is concerned we continue to focus all efforts to find a private solution. Discussions are still very much under way with those potential interested third parties.
“We can understand the Government needs to consider all of their options as well regarding nationalisation, but that’s not something the company is focusing on.
“We are fully focused on finding a private solution. We expect the strategic review to conclude by February. At this moment in time we have no reason to change that.”
Former Lloyd’s of London boss Ron Sandler will go in as the Rock’s executive chairman charged with bringing stability to the bank if a private sector buyer is not found.
Reports yesterday suggested that the contingency plans at the Treasury are believed to be well advanced, with Mr Sandler placed at the heart of them. Mr Sandler, confirmed at the weekend that he had been approached by the Government towards the end of November over Northern Rock.
As chief executive of Lloyd’s of London, he received credit for bringing the insurance market back from the brink of collapse.
He said: “In the event of nationalisation, I have agreed I will go in as executive chairman. His role would be “to get things stabilised, to make sure the bank has proper plans in place”.
Tory leader David Cameron yesterday said nationalisation “will be the most complete humiliation and failure for the Government”. Robin Ashby, of the Northern Rock Small Shareholders Group, said: “We would agree with the company on this. We want to see a private sector solution that involves the existing shareholders.” Speaking ahead of tomorrow’s Northern Rock shareholder meeting in Newcastle, Justin Urquhart Stewart, of Seven Investment Management, said: “I think it will be nationalised by Tuesday. The current structure is unworkable.”
Liberal Democrat treasury spokesman Vince Cable said: “If it is indeed true that the Government are proposing to proceed with the public ownership option we now need to know very quickly how they propose to do it, how the taxpayers interest will be best protected, what will happen to the small shareholders and what will happen to the operation in the North-East of England.”
A Treasury spokesman said: “All options remain on the table for Northern Rock.”
