Alastair Darling dreams of a new life for Northern Rock

Oct 23 2009 by William Green, The Journal

THE Chancellor has hailed Northern Rock as the potential “foundation of something bigger” taking on banking rivals short-changing consumers.

Alistair Darling said the Rock had made dramatic progress since nearly collapsing in 2007 and stressed more competition in the banking sector was vital.

He also revealed several parties have expressed interest in buying the bank – nationalised last year – and hinted at potential bids from abroad in an exclusive interview with The Journal.

The Chancellor also declared that the regional campaign, spearheaded by The Journal, helped save the bank from being shut down.

His comments come as he will today meet Northern Rock staff during a visit to the North East. Mr Darling will also jointly chair the regional economic council, set up to fight the recession, with Business Secretary Lord Mandelson.

Speaking to The Journal, Mr Darling said Northern Rock was in a “much better position” than two years ago when it nearly collapsed in the credit crunch.

“In October 2007, people were talking about the end, they were talking about Northern Rock effectively disappearing

“And yet here we are now where there is every chance we will be able to have a bank that has got a viable future. Obviously, at some stage we will take the decision to do what we said we would which is to look for a buyer to take the bank on.”

The enduring strength of the Northern Rock name was also an illustration of how far the bank had travelled.

Mr Darling said: “Two years ago people openly said the Northern Rock brand was dead. Now all the evidence is that Northern Rock is certainly a very recognised brand, but it is also a good brand.

“It is a good brand and that is a testament to a large extent to the people that work there and who have been through a torrid time in the last couple of years.”

The region’s “loyalty” to Northern Rock was highlighted by the Chancellor.

The regional campaign – led by The Journal – in support of Northern Rock was also “very important.”

“One of the key things was that we able to show that notwithstanding the problems that management had got the bank into, people rallied around.

“Northern Rock is very much synonymous with the North East and there was a lot of support.

“And the fact there was that support, it mattered in Whitehall but it also mattered in Brussels too.”

He insisted the Government was under no pressure to sell the bank. Its long-term future lay in the private sector but would only be sold when that would get the best returns for taxpayers, said Mr Darling.

Calling for more banking competition, he added: “Simply absorbing Northern Rock into another big bank doesn’t bring more competition into the system.

“So one of the things that will be key in my mind is if when someone comes along, is someone new coming into the market?

“There isn’t enough competition. There are half-a-dozen big mortgage providers, banks generally, and that is not enough in an economy of our size. We need more than that. I hope that Northern Rock can be the foundation of something bigger in years to come.”

Mr Darling went on: “I don’t have a timetable. At the moment, we know there are one or two people looking but they are looking at other things as well.

“But we are not under pressure to sell. The key is this bank still owes us £10bn and we are still sitting on the bad assets that we had to take off the good bank, if you like.”

Quizzed whether Virgin Money or Tesco had put forward offers, the Chancellor said: “There are all sorts of people that have been mooted, but there nobody has come along to us and said here is an offer.

“There is a lot of interest and there might be interest from abroad as well, who knows? But nobody has come forward and said I am ready to make an offer. We are in no hurry.”

Page 2: Question marks over Northern Rock Foundation