Treasury mandarins have recruited City heavyweight Ron Sandler as a provisional chairman of Northern Rock, ready to assume control of the troubled mortgage bank if it is taken into public hands. Sunday Telegraph, Financial Times, The Times
The revelation is a clear indication that a nationalisation of Northern Rock is being actively considered by the Treasury and its advisers at Goldman Sachs.
It also comes amid mounting expectations that a commercial rescue of Northern Rock cannot be achieved, owing to difficulties in securing a £15bn funding package from a consortium of lending banks.
There is now less than a 50 per cent chance that Northern Rock will be sold – unless the stricken bank’s shareholders break the logjam over any potential deal, according to people familiar with the process.
Meanwhile, Northern Rock has implemented a lucrative bonus package for senior staff. Under the package – which will attract controversy because the company is being propped up with taxpayers’ money – staff can receive bonuses amounting to a quarter of their gross annual salary every three months, effectively doubling their pay if they are paid the bonus for a year.