Caring foundation can be built on Rock

Oct 16 2009 Michael Darrington, The Journal

WE as taxpayers own the Northern Rock bank, so what should we want our Government to do with it? There is a movement to say that it should be sold back to the private sector as soon as possible – perhaps with some bad loans being kept by the taxpayer.

Common sense suggests that this is absolutely wrong. Why?

Because what we need are banks that genuinely care for society, for their customers, and for their staff – giving good interest rates to depositors and keeping rates to borrowers at the bottom end of the market.

We need banks that care about this rather than just about maximising profit, mainly for the excessive bonuses and benefit of their top earners and, to a lesser extent, their shareholders.

There is now a great opportunity to have such a bank, and it is the bank we already own – Northern Rock. It must not be sold.

What I propose is that Northern Rock should be transferred to, or even turned into, a charitable foundation – where it would be run as a mutual. It would be set up to operate for the benefit of society, customers and staff.

It would only be required to make enough profit to meet its charitable objectives with perhaps 25% of its earnings, with the balance being used to build up prudent reserves so that it would be secure in the event of another financial crisis.

The organisation would be one with caring values – in many ways similar to the ones that we developed in Greggs. It would be run by bankers who are not caught up in the greed that has permeated many financial institutions, but who would earn good salaries and sensible, performance-related bonuses. It would also provide a restraint on other banks that are dominated by the profit motive.

This approach would, I believe, turn a problem into a great opportunity. If you feel this proposal – to use Northern Rock for the benefit of society – has merit, then please show your support. Particularly at this stage in the electoral cycle, strongly-expressed public opinion can move mountains.

Sir Michael Darrington is former managing director of Newcastle-based retail bakery Greggs