Britain nationalizes troubled bank Northern Rock amid criticism
Written on February 19, 2008
LONDON — Prime Minister Gordon Brown’s government began nationalizing stricken mortgage lender Northern Rock PLC on Monday.
The move to acquire Northern Rock is Britain’s biggest bank nationalization since the Labor government brought the Bank of England into public control in 1946.
The government repeatedly insisted a private sale was its preferred option. But after five months of intense speculation about the future of Britain’s most public casualty of the global credit crunch, Brown said that nationalization was the best choice until market conditions improve.
The government had rejected two private proposals from Richard Branson’s Virgin Group and an in-house bid from the bank’s management team because they involved too many risks for taxpayers and a very significant government subsidy.
Brown said Northern Rock will be run "at arm’s length from the government under professional management until adverse market conditions change."
Ron Sandler, who brought back Lloyd’s of London from the edge of bankruptcy in the late 1990s, has been appointed to run Northern Rock cash advance. .
Bloomberg News contributed to this report.
Filed in: economics.