Rock: business model was ‘a good one’

Source: Exec Digital UK

Date :16/10/2007 17:12:31

Northern Rock’s top executives have denied doing anything wrong in the run-up to the bank's recent near-collapse.

Chief executive Adam Applegarth said that the British banking system was partly to blame for the first run on a British bank in more than a century.

Four senior executives of the Northern Rock were questioned by members of the committee following the bank's recent near-collapse.

Breaking news

The news that Northern Rock needed emergency funding broke on the BBC at September 13, prompting huge queues outside branches from early the next morning.

Mr Applegarth who was being quizzed by MPs at a Treasury Select Committee hearing, said that the bank and the authorities had planned to announce the emergency loan the following Monday, which they hoped would have led to less panic.

The bank's chairman, Dr Matt Ridley, said it had been hit by "wholly unexpected" events and he defended the way he and his colleagues had been running the bank adding that "the Northern Rock business model was a good one.

Resignation

In the course of the questioning, it was also revealed that all the bank's senior directors had offered to resign in the immediate aftermath of the run, but had been asked to stay on to sort out its problems.

Mr Ridley told the committee he was willing to resign if the board thought that it was in the best interest of shareholders and investors.

Mr Ridley also confirmed that the Northern Rock had now borrowed £13 billion from the Bank of England but did not guess how much more it would need.

Investors

The bank, said it is now assessing options including a sale, a break-up and closing to new business as well as continuing talks with a number of "potentially interested" suitors.

Shares in Northern Rock have fluctuated wildly over the past fortnight as investors debate what price any buyer for Northern Rock will pay.

Sir Richard Branson's Virgin Group last week revealed it was planning a bid for the bank, along with a group of heavyweight investors.

October 16 2007