Applegarth resignation prompts government takeover talk

Source: Exec Digital UK

Date :17/11/2007 16:55:58

The Liberal Democrats have called on the government to take control of Northern Rock after chief executive Adam Applegarth resigned

Acting Lib Dem leader Vince Cable said a temporary government takeover was the best way to safeguard £24 billion of public money loaned to the bank.

The Tories have demanded assurances taxpayers' money is being safeguarded.

Mr. Applegarth quit the ailing back on Friday but is staying on until Januray to manage its sale. Seven other board members also resigned.

Safeguard

Increasing fears that the Bank of England will have to underwrite Northern Rock for several years is eating away at any political support the bank had.

Its shares collapsed after it was forced to seek emergency funding from the Bank of England in September.

Vince Cable believes any private buyer of the bank would be looking for "a lot of public money". He said that a government takeover was the best way of safeguarding public money tied up in the bank.

Shadow Chancellor George Osborne said Mr Applegarth's departure had not reassured taxpayers that their loan was protected.

"The confusion and indecision surrounding the handling of Northern Rock grows and grows," he said.

Two private investors - a consortium led by Richard Branson's Virgin Group and investment firm Olivant Advisers - had made proposals to rescue the bank by yesterday’s deadline.

US private equity firm JC Flowers firms is also jostling for position, hoping to arrange a takeover of Northern Rock with £15 billion of financing from the markets.

November 17 2007