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Northern Rock Plc


Latest statement - 17 February 2008

The Treasury, following consultation with the Bank of England and the FSA, has today announced the following:

"The Government has today decided to bring forward legislation that will enable Northern Rock Plc to be taken into a period of temporary public ownership. The Government has taken this decision after full consultation with the Bank of England and the Financial Services Authority. The Government's financial adviser, Goldman Sachs, has concluded from a financial point of view that a temporary period of public ownership better meets the Government’s objective of protecting taxpayers.

Northern Rock will be open for business as usual tomorrow morning and thereafter. Branches will be open; internet and call centre services will operate as normal. All Northern Rock employees remain employed by the company. Depositors' money remains absolutely safe and secure. The Government's guarantee arrangements remain in place and will continue to do so. Borrowers will continue to make their payments in the normal way. The Financial Services Authority have advised that Northern Rock remains solvent."


What does this actually mean for customers?

Savers and borrowers with Northern Rock are not affected by this announcement. All of the government's guarantee arrangements remain in place; savers' money remains absolutely safe. The company will continue to operate and provide services to customers as normal. Branches, call centres, postal and internet banking all remain open and accessible, as usual.

Depositors' interests are fully protected by the Treasury guarantee made in the 9 October 2007 statement below.

The guarantee covers all retail deposits including future interest payments, movements of funds between accounts and term deposits for the remainder of the term of the deposit.

What is nationalisation?

This involves the government taking a privately-owned business into public ownership.

What happens now?

The government will introduce a Bill that will enable the bank to be brought into temporary public ownership (nationalisation).

The legislation will enable the government to acquire the bank's shares. Subject to the terms of legislation it will provide for shareholder compensation to be determined by an independent valuer. It will also allow for the running of the bank and for the eventual transfer back into the private sector as soon as it is right to do so.

The Bill has deliberately been drafted to ensure that a bank can only be acquired in certain tightly defined circumstances. And that power will only last for twelve months.

Will shareholders be compensated?

The Treasury will appoint an 'independent valuer' to decide in accordance with the legislation how much compensation should be paid.

Who will run the bank?

The Chancellor has appointed Ron Sandler to be executive chairman of the bank.

Where can customers get more information?

If you have any further questions please call the Northern Rock helpline on 0845 600 7301.

Previous statement - 21 January 2008

Previous statement - 9 October 2007

The Treasury, on behalf of the Tripartite Authorities, announced the following:

"In addition to the arrangements previously announced to protect existing depositors of Northern Rock it is also putting in place arrangements that will cover new retail deposits made after
19 September, including those made from today. These will cover all retail deposits including future interest payments, movements of funds between accounts and term deposits for the remainder of the term."


What does this actually mean for depositors?

Depositors can still access or deposit money and they can use their accounts in the usual way.

  • Savers: accounts can be used in the usual way.
  • Mortgage holders: monthly payments can be made in the usual way.
  • Completions: Northern Rock will complete new mortgages as usual.

Disclaimer

News articles on this website are accurate, to the best of our knowledge, only at the date of publication. If the information they contain changes, follow-up articles may be published.