Chancellor calls for Northern Rock resolution

by Gill Montia

Story link: Chancellor calls for Northern Rock resolution

The Chancellor of the Exchequer, Alistair Darling, is urging the board of Northern Rock and its recently appointed chairman, Bryan Sanderson, to secure an early resolution to the bank’s future.

The move has been seen as putting responsibility for the bank’s plight squarely on its management and Mr Darling has made it clear that the Government will not guarantee the bank’s finances indefinitely.

Since Northern Rock’s liquidity problems came to light, it has borrowed £20.6 billion from the Bank of England, taking £4.7 billion in emergency lending over the past week.

Meanwhile, JC Flowers, the US private equity firm, has announced that Paul Myners, former chairman of Marks & Spencer, will be the next chairman of Northern Rock if its takeover bid succeeds.

Richard Pym, the former group chief executive of Alliance & Leicester, would be executive deputy chairman and chief executive during the period immediately following the acquisition.

However, Virgin Group is busy working on its proposals for a takeover, as is Cerberus, the US private equity group.

Citigroup is still proposing to lend up to £10 billion in financing for Northern Rock and its new owners, although Northern Rock would have to dissolve its current borrowing agreement with the Bank of England before it could turn to Citigroup for support.