Troubled British bank Northern Rock is to be brought under temporary state ownership, Chancellor Alistair Darling announced in a surprise press conference on Sunday, thereby rejecting bids by Virgin Group and the bank's own management.
British finance minister Alistair Darling announced on Sunday the temporary nationalisation of troubled bank Northern Rock, which was hit by the global credit crunch in August.
"The government has decided to bring forward legislation to bring Northern Rock into a temporary period of public ownership," he said during a surprise press conference at the Treasury in London.
The move means that officials have rejected two bids made by entrepreneur Richard Branson's Virgin Group and the bank's own management team.
Darling said that this was because "in the current market conditions, we do not believe that the two proposals deliver sufficient value for money for the taxpayer".
Northern Rock, based in the northeastern city of Newcastle, was plunged into a severe crisis in August last year when the global credit squeeze forced it to request emergency help from the Bank of England (BoE).
The turbulence at Northern Rock prompted customers to queue in their thousands to withdraw savings from branches across the country, in turn affecting consumer confidence in the banking sector as a whole.
The BoE has lent the troubled bank about 25 billion pounds (33.4 billion euros, 49.4 billion dollars) in emergency funding since September to keep it afloat.
Darling said the move was made after "full consultation" with the BoE and watchdog body the Financial Services Authority.
"Northern Rock will continue operating as a bank on a commercial basis. It will be open for business as usual tomorrow morning and thereafter," he said.
"Importantly, savers and depositors' money remains safe and secure."
Date created : 2008-02-17