Sunday, February 17, 2008

Darling announces nationalisation of Northern Rock

Alistair Darling stepped onto the rostrum at the HM Treasury to deliver his expected announcement on the beleaguered Northern Bank at 16:14 GMT. In his short statement he said, “We’ve made our choice after considering all proposals … the government has brought legislation forward to put the bank into temporary public ownership” He blamed the Northern Rock crisis on US sub-prime problems and global slumps in shares. He said that “government intervention was necessary to maintain financial stability throughout the banking system as a whole”.
“It became clear that no investor was willing to take over the bank without government support” and that “both proposals involved a degree of risk for tax players,” he said. He suggested that the bank might return to the private sector “after markets stabled”. He said he would also make a full statement to parliament on Monday.

Sky’s political correspondent, Adam Bolton, described the ongoing problems with the bank as being “a major headache for Gordon Brown”. The move to nationalise the financial institution is unprecedented and there are “grim days ahead” according to George Jones, the Press Association’s political correspondent. There is also concern for the share holders in all this and there maybe compensation due which will leave the government out of pocket as it heads to a future election. The government is likely to see a barrage of criticism in parliament this week with possible accusations that they dithered over the issue at a time when an early election was on the cards. This is something vehemently rejected by both Alistair Darling and the Prime Minister.

No comments: