Rock sale fever quelled
Apr 29 2009 By nebusiness
T
Treasury officials had prepared plans to offload the nationalised bank later this year, but last night Alistair Darling backed down from those plans.
This week The Journal called on the Chancellor to take his time over returning the bank to the private sector after Newcastle Central MP Jim Cousins predicted large-scale job losses if the Government rushed into an early sale.
Virgin Money or Santander, the company behind the Abbey Bank, had been linked as potential buyers for the Rock, a move which could see officers merged and the bank name changed,
But in the House of Commons yesterday the Chancellor played down the risk to Newcastle-based jobs.
Mr Darling told MPs: “I’m in no hurry to do this. I think it is far better that we ensure that when we sell, we are satisfied it represents the best possible deal. It’s not something I would rush into. I want to make sure that we do get a good price for the assets we now have.”
As well as job losses it has been suggested a rushed sale of the Rock during the recession could lead to the Government missing out on more than £1bn. Newcastle Central MP Jim Cousins yesterday met with Treasury officials and was given similar assurances that the Government would not rush into a sale.
Mr Cousins, who sits on the Commons Treasury select committee, said: “Despite these assurances, I think it is important that we get as firm a commitment as possible to doing this properly and not rushing through a sale in the time scale suggested. We need to get that nailed down because it is very important that people have that job security and for the continued role of Northern rock in the region.” He added the talk of the possibility of a quick sale could have been generated by potential buyers looking to test the Government’s reaction.
Mr Cousins was speaking after the Chancellor was questioned in the Commons regarding his plans for Northern Rock. Liberal Democrat treasury spokesman Vince Cable raised the issue at question time.
He asked Mr Darling: “Why are you proposing to sell the good parts of Northern Rock this year, when, under current market conditions, it will almost certainly guarantee a very large loss, rather than waiting for market conditions to improve and getting better value for money for the taxpayer?.”
Mr Darling said he had always been clear his objective, “once we get through this”, was to return the nationalised banks to the private sector.
“I don’t believe the Government ought to be in the business of running banks in the long term.”
He said: “The question is when do we sell those banks into the private sector and that will be determined by what represents the best value for money for the taxpayer.”
Advisers at Credit Suisse are thought to have already started work on plans to effectively split the bank in two.
Under this, Northern Rock would be left with what many would regard as one of the safest mortgage books in the world while the Government took over the high-risk debt.
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