Nationalisation of Northern Rock
The Treasury select committee chairman John McFall MP said: "I don't think customers of Northern Rock should be worried about their current accounts or mortgages.
[23] Later that day, the Chancellor of the Exchequer, Alistair Darling, announced that the British Government and the Bank of England would guarantee all deposits held at Northern Rock.
[27] John Devaney and Simon Laffin joined the board in November 2007, when Sir Derek Wanless, Nichola Pease, Adam Fenwick and Rosemary Radcliffe retired as non-executive directors.
On 11 January, Northern Rock announced that it had sold its portfolio of lifetime home equity release mortgages to JP Morgan for £2.2bn and that it would use this to pay off a piece of the Bank of England loan.
[37] The FSA internal report also concluded that ultimately the blame for the collapse of Northern Rock should sit at the feet of the bank's senior management.
The committee held several televised meetings, in which they called witnesses from the former Board of Northern Rock, the Bank of England, the Treasury, and the regulatory bodies.
The high-risk, reckless business strategy of Northern Rock, with its reliance on short- and medium-term wholesale funding and an absence of sufficient insurance and a failure to arrange standby facility or cover that risk, meant that it was unable to cope with the liquidity pressures placed upon it by the freezing of international capital markets in August 2007.
[44] On 12 October 2007, Virgin Group announced that it intended to bid for Northern Rock as the lead partner in a coalition including American giant AIG, turnaround specialist WL Ross and First Eastern Investment.
[56] On 12 January 2008, the Treasury recruited Ron Sandler, the former Lloyd's of London Chief Executive, to lead Northern Rock, in the event that the bank was nationalised.
On 15 December, Northern Rock hired the bank Goldman Sachs to put together a financing package, to assemble backers and present proposals to its board.
[61] On 17 February 2008, Alistair Darling, the Chancellor of the Exchequer, announced that Northern Rock was to be nationalised[4] claiming that the private bids did not offer "sufficient value for money to the taxpayer" and thus the bank was to be brought under a "temporary period of public ownership".
[65][66] The government is the sole shareholder through UK Financial Investments, and the bank is managed at "arm's length" on a commercial basis by an independent board under Ron Sandler.
[67] Prior to the markets opening on 18 February, trading in Northern Rock's ordinary and preference shares on the London Stock Exchange was suspended.
[70] On 10 March 2009 the Office of Fair Trading published their report on the impacts of public support for Northern Rock on competition in financial services.
In October 2008, the post-nationalisation management of Northern Rock decided not to bring legal action for negligence against the directors in charge during the crisis, including former chief executive Adam Applegarth, citing insufficient grounds to do so.
[80] As is common practice in bank securitisations, Granite was set up as a charitable trust with any residue on winding-up to benefit a small charity, Down's Syndrome North East.
[87] The Press Association noted on 22 October that Northern Rock may give their employees bonuses in the future, if certain targets in paying back the Government loan are met.
This caused some unrest from a number of media outlets and the Liberal Democrats' Vince Cable for example, but the decision to issue the bonus was defended by the Unite union, calling it a reward for their hard work and dedication.
[94] In a report commissioned by development agency One North East it was detailed that the downfall of the bank cost the local region around £800 million, mainly in relation to the job losses.
Instead, for the next three years the foundation will receive an annual £15 million payment from Northern Rock, whether it remains publicly owned or returns to the private sector.
On 15 January 2008, a meeting was held at the 11,000 seat Metro Radio Arena to discuss the situation which then existed, where all but one of the proposals put forward by the hedge funds were rejected.
[108] The hedge funds are to request that an independent valuer assesses the level of compensation and to argue that the bank's shares are worth more than the final price of their trading prior to nationalisation.
Three North Labour MPs have agreed to hand a series of petitions in, on behalf of shareholders who lost hundreds of thousands of pounds when their shares were confiscated.
[120] In May 2009, it was reported that Sir Anthony Clarke and two other senior judges in the Court of Appeal would hear the next stage in the judicial review starting on 10 June for three days.
[133] On 19 January, it was announced that Northern Rock would change its business strategy by offering more retention deals to its existing mortgage borrowers as their products expire, hence taking longer to pay back the remainder of its Government loan.
[158] Due to Hoffman's previous position NBNK Investments would not be permitted to table a bid for Northern Rock for a period of 12 months from 1 November 2010.
[166] On 8 December the Northern Rock plc Transfer Order 2009 was laid before Parliament and in this the Treasury announced that this restructuring would take place from 1 January 2010.
[180] In March 2009 Alistair Darling said that he was keeping his options open during the "fast-moving" crisis in the banking industry, and thus not ruling out the possibility of a mortgage book merger between Northern Rock and Bradford & Bingley.
In October 2014, it was announced that Virgin Money Holdings (UK) plc would float shares on the London Stock Exchange in order to raise approximately £150 million which would go towards expanding and enabling it to continue to hire and maintain its existing base of top staff members.
[198] The successful offer led to a final payment of £50 million to the UK Government with respect to the company's IPO following the purchase of Northern Rock.
