Past may hold the key to Northern Rock's future

Sep 28 2009 By The Journal

NORTHERN Rock should be reincarnated as a building society rather than being sold off to ease Government debt, an influential report last night said.

The proposals from the Building Societies Association - which have won backing from both MPs and senior figures in the business world – say re-mutualisation of the bank will help the national economy and make it less likely to fall victim to another credit crunch.

Former Newcastle Building Society chief executive Bill Midgley last night welcomed the report, saying it would lead to greater lending into the mortgage market and would support North East jobs.

And with ministers pressing ahead with moves to sell off the Rock to recoup the billions of pounds of public money spent propping it up, a number of the region’s MPs at the Labour Party conference in Brighton also called for the re-mutualisation idea to be looked at.

Mr Midgley, also a former chairman of the British Chambers of Commerce, said: "This is a good proposition, a brave move and one that should be taken on board.

"It will be good in that it will help retain jobs in the North East at one of the region’s largest employers.

"Current proposals to split the Rock into bits will lead to job losses in the region."

The Government is currently awaiting approval from the European Commission on proposals to split Northern Rock into two and sell of what it can.

Mr Midgley continued: "Northern Rock has a lot of good assets and it will need these assets if it is to become commercially viable again.

"The taxpayer will have to wait a while longer for their money to be returned if its re-mutualised. But Northern Rock was once a successful and profitable business and there is no reason why that should not be the case once more."