Northern Rock Exec Resigns

by Stewart Douglas

Story link: Northern Rock Exec Resigns

Under-fire chief executive of Northern Rock, Adam Applegarth has today resigned according to official statements from the troubled mortgage lender, after his initial resignation offer was deferred to allow the bank to progress in initial takeover talks.

Adam Applegarth is the latest senior executive to lose his job over the sub-prime mortgage sector collapse of the summer months, following in the footsteps of Stan O’Neal at Merrill Lynch and Chuck Prince at Citigroup, after very public liquidity problems led to the first run on a UK bank in over a century and a half.

The Northern Rock executive first came under fire when the bank’s liquidity crisis hit the headlines.  The over exposure to sub-prime debt versus high risk short term financing agreements left Northern Rock lacking in short term liquid assets, leading to fears that it may not be able to cover customer withdrawals and sustain its lending operation.

Adam Applegarth’s resignation comes as several potential suitors vie for the takeover opportunity of the asset-strong bank, despite the fact that it is still short of significant short term funds, with the company still considered good value for money by certain analysts in light of its share price crash following its highly public problems.

Potential takeover suitors have been set a deadline to submit their proposals until the end of today, with Virgin Money the only bid put forwards as of the end of business hours.  JC Flowers, a US based private equity outfit are also expected to post their bid later on in the day, whilst Cerberus are also expected to launch a formal bid.

Meanwhile the bank has been under the media spotlight again over the course of this week, amidst rumours that the UK taxpayer is continuing to fund the operations of the business as it struggles to find its feet.  It is thought that any takeover bid will encompass sufficient capital injections in order to help alleviate the public burden.