Northern Rock speculation amid building society calls

Jul 9 2009 The Journal

NORTHERN Rock’s future was the subject of renewed speculation last night after Chancellor Alistair Darling called for new entrants and a bigger building society presence to revive competition in the banking sector.

Mr Darling said it was “essential” to maintain competitive markets after the financial crisis lessened the number of major players and hinted the sale of the North East institution would be used to help with this aim.

A number of lenders were taken over in a slew of rescue deals, while the Lloyds takeover of HBOS was waved through as financial stability became the overriding concern.

Now Mr Darling wants to see consumers benefit from greater rivalry, with new firms entering the fray.

He said: “We want to see greater competition and choice for consumers as well as a bigger role for mutuals.

“We need to promote a competitive market, with non-banking institutions.”

He added the Government will dispose of Northern Rock “as soon as appropriate in a manner that will promote competition for retail services”. His comments, which came as he announced the launch of the Treasury’s White Paper on bank reform and regulation, follow reports at the weekend that the Government wanted to sell Northern Rock to a new entrant looking to gain market share and a high street foothold.