Northern Rock executives under fire

by Gill Montia

Story link: Northern Rock executives under fire

Senior executives at Northern Rock have been criticised for continuing with plans to distribute £60 million to investors next week, despite the bank having been rescued by the Bank of England in the last few days.

The queues of savers waiting to withdraw funds have subsided since the Chancellor of the Exchequer guaranteed their savings but analysts still think it unlikely that Northern Rock will survive without being taken over by a larger financial institution.

There have been calls for the resignation of Northern Rock’s chief executive and directors, who are accused of taking excessive risks and bringing the bank to the brink of collapse.

However, in efforts to reassure customers that business is returning to normal, a Northern Rock spokesman has reported that the bank’s directors will remain, along with their commitment to pay a dividend.

The government’s support of the bank has also attracted criticism in that its actions have been seen as favouring bank savers over other victims of financial collapse.

The voices of pension campaigners have been raised to point out the injustice suffered by those who lost life savings when Equitable Life, the mutual insurer, that was forced to close in 2000.

This group is also being angered by the fact that savers in final salary pension schemes have lost their money, despite both the government and their employers guaranteeing its safety.