Mervyn King gave his blessing yesterday to a temporary nationalisation of Northern Rock as the Treasury extended its 100 per cent guarantee to a wider range of Northern Rock’s wholesale creditors. This means the taxpayer’s exposure to Northern Rock now stands at £56bn, according to the Treasury. Financial Times, Daily Telegraph, The Times, BBC
Bradford & Bingley has approached Northern Rock about buying assets from the troubled lender.
King also repeated his call for a new insolvency regime for banks and said this had been agreed a year ago by Ed Balls, City minister in the Treasury until June this year.
Treasury insiders yesterday said it was Balls who had insisted on the work and who chased progress and that it was “nonsense” to suggest that King had pushed for it to be accelerated.
King said a shake-up of Northern Rock was 'made much more difficult by the fact that the shareholders can block what seems to be a sensible financial reorganisation by the people that are financing the vast bulk of the balance sheet'.