Treasury appoint Northern Rock chief as nationalisation looms

by Gill Montia

Story link: Treasury appoint Northern Rock chief as nationalisation looms

Last week’s warning by the Chancellor of the Exchequer that the future of Northern Rock had to be settled “one way or another” has been followed by the news that the Treasury has recruited Ron Sandler, the former head of Lloyd’s of London, to lead Northern Rock should it be nationalised.

The appointment is evidence that the Treasury has a fully developed plan for nationalisation of the bank, and has prompted speculation that a decision could be taken within days.

According to the BBC, Mr Sandler, who is well known to Prime Minister Gordon Brown, will become executive chairman of Northern Rock in the event that it is nationalised.

This week is a crucial one for Northern Rock because on Tuesday, the bank’s shareholders will vote on resolutions that restrict the ability of the bank’s board to sell assets without seeking their permission.

Robin Ashby, of the Northern Rock Small Shareholders’ Group, remains hopeful that: “we can get a shareholder-led solution and that the extraordinary general meeting on Tuesday will be a step in that process”.

He does do not see nationalisation as “either a sensible solution or indeed one that needs to be done.”

The action being taken by shareholders is not welcomed by the Treasury, which is mindful of the fact that taxpayers are supporting the bank by up to £55 billion, in terms of loans made by the Bank of England and guarantees covering some of Northern Rock’s obligations on the wholesale money markets.

Chancellor of the Exchequer, Alistair Darling, has clearly stated that his priority is to secure repayment of taxpayers’ money.