Gordon Brown ruled out letting Northern Rock slide into administration yesterday, claiming it was ;'a route to a fire sale of assets', as he prepares to make a decision on whether to nationalise the beleaguered bank. Financial Times, The Independent
Brown and Alistair Darling, the chancellor, are faced with a clear choice between a 'temporary' nationalisation or a private sale, which could involve hefty government support over a number of years.
The Government accepts that it will almost certainly have to compensate Northern Rock shareholders to minimise the threat of messy litigation if it nationalises the bank.
As shares in Northern Rock fell to an all-time low of 68p, the bank still believed a private deal could be done. Some close to the bank suspect Brown is talking up the possibility of nationalisation to put pressure on shareholders to back a sale.