Big guns lined up for the Rock
Oct 26 2007 by Paul Gannon, Evening Gazette
NORTHERN Rock suitor JC Flowers today unveiled a heavyweight management line-up for the stricken mortgage lender as talks over a possible offer continue.
The private equity firm confirmed former Marks and Spencer chairman Paul Myners - who fought off a hostile offer for the retailer from Sir Philip Green - will be the chairman of the company if the talks lead to a successful offer.
Other big-hitters include former Alliance and Leicester chief executive Richard Pym, who would become Northern Rock’s interim chief executive.
JC Flowers faces opposition from a consortium led by Sir Richard Branson’s Virgin to take over the Newcastle-based company.
Soaring borrowing costs in the summer’s credit crunch forced Northern Rock to turn to the Bank of England for emergency funding in September, sparking the first run on a UK bank in nearly 150 years. The company has borrowed more than £20bn so far.
Yesterday the beleaguered bank was given “a matter of weeks and months” to sort out its future by Chancellor Alistair Darling.
Giving evidence to the Commons Treasury Committee yesterday, Mr Darling said he hoped a way could be found for the bank to carry on in some form, but stressed it was up to the directors to come forward with proposals following last month’s bank run, which was only halted when the Government promised to guarantee depositors’ savings.
While he said that February - when the existing Bank of England loan facility comes to an end - was not a “drop dead date” for the bank, he made clear that it could not carry on indefinitely.
Mr Darling also defended the way the authorities - the Treasury, the Bank of England and the Financial Services Authority - had responded to the international “credit crunch” caused by the collapse of the US sub-prime mortgage market which led to the run on Northern Rock.
He acknowledged there were “lessons to be learned”.
But he rejected claims that the run on the Northern Rock could have been averted if the Bank of England had intervened earlier to support the financial markets.
The mortgage lender’s crisis claimed its first scalp last week when the company’s board accepted the resignation of chairman Matt Ridley. Chief executive Adam Applegarth is also set to leave the group when a rescue deal is concluded.
