Rock’s ‘on the way to revival’

May 13 2008 By Andrew Mernin

A look back at the fall-out from the Northern Rock crisis

May 2008: MINISTERS have run into trouble with Northern Rock shareholders because the system that will decide compensation in the wake of nationalisation is yet to be implemented.

The Newcastle-based lender was nationalised in February and the Treasury promised to appoint an independent valuer to decide whether former shareholders would receive any compensation.

But that job has still not been filled amid claims the Government is having difficulty finding a suitable appointment because of the controversial system that will decide the level of compensation.

April 2008: NORTHERN ROCK is poised to shed 2000 jobs, and is expected to notify the Government of its intentions this week.

The move will kick start a 90-day consultation period with unions and employees before any redundancy notices are handed out. It’s thought most of the jobs will go over a 12-month period.

Branches of the Rock are unlikely to be closed as the company wants to maintain its infrastructure ready for the expected recovery from the credit crunch.

The regional Trade Union Congress and the unions are working with the management to make the redundancies as painless as possible.

Feb 2008: Sir Richard SIR Richard Branson said yesterday that he could have saved most Northern Rock jobs if Virgin Money had been able to take over the stricken bank.

The mortgage-lender was nationalised on Friday after the Government said it was the best way to secure the return of billions of pounds of public funds.

Sir Richard said: “We would have saved most of the jobs, which sadly is unlikely to be the case under nationalisation.”

Jan 2008: ALISTAIR Darling has announced plans to give the Financial Services Authority greater powers to step in if another bank suffers similar problems to Northern Rock.

The Chancellor of the Exchequer said legislation will come into force which will allow the FSA to seize and protect customers’ cash if a bank gets into difficulty.

It is hoped the new legislation will increase customer confidence, avoiding another run on the bank like that seen at Northern Rock branches in September.

“I want to make sure our own legislation is up to the mark in dealing with problems when they arise in future,” Mr Darling said.