Northern Rock ‘could have a future as a building society’

Nov 4 2009 by William Green, The Journal

THE Chancellor yesterday said he had “no difficulty” with a Northern Rock building society but warned the Government would not pay for it.

Alistair Darling spoke out after Labour MP John McFall, chairman of the Commons Treasury committee, asked him to consider remutualising the Rock.

Mr Darling also promised Northern Rock customers should be treated in a similar way no matter where their money resided after the bank split into two new businesses.

“In relation to mutuality, I would like to see more diversity in the banking system I have always wanted to support the building society sector,” said Mr Darling. “I just say this is relation to Northern Rock we cannot put any more public money into it, that just isn’t possible. State aid would preclude it.

“Anyone seeking to take over Northern Rock would of course have to have regard to the fact that it would be necessary to make sure the taxpayer is repaid.

“But certainly in principle I have no difficulty with the concept of a mutual provided there were funds available coming from outside Government sources to do that,” he told the Commons.

Former minister Alun Michael also called for the Rock to return to the mutual sector, arguing it was “very unlikely” it would have run into the problems if it had remained there.

Mr Darling said Northern Rock’s problems were caused by a management problem as much as anything else.