MP thanked for support by Northern Rock Foundation

Alan Campbell MP was today thanked for his support by the Director of the Northern Rock Foundation.

Alan Campbell said ‘The government was right to step in last autumn to save Northern Rock. The bank got into trouble because of problems in the sub-prime financial markets around the world and because the then Northern Rock business model left the bank exposed. This was not a problem of the governments making but it falls to government to act to protect savers and to stop the problems spreading to other parts of the banking system."

"None of the private bidders so far have provided a secure future for the business, the workforce or the taxpayer who have guaranteed savers. Those guarantees have not been called upon and the Bank of England's loan remains secured against assets but a period of public ownership gives added security for the taxpayer".

Alan Campbell says, "I know many of my constituents are concerned about Northern Rock's future as savers, employees, shareholders or beneficiaries of the Northern Rock Foundation. Savers have their money guaranteed and the Foundation is guaranteed £15 million each year for the next three years. In my view the best way of securing jobs and branches is if the bank continues to operate on a commercial basis albeit with a different business model to the previous one. Although the value of shares had already collapsed, an independent valuer will determine the level of compensation to shareholders".

Alan Campbell added, "A period of temporary public ownership offers the best option. The alternatives put forward, namely Administration, would have meant the worst of all worlds. Every job and mortgage would be at risk, the Foundation would have closed and a fire sale of assets would have meant no return for shareholders or, in the longer term, for taxpayers. Although it requires tough decisions I believe the route set out by the government is in the longer term interests of Northern Rock and our area."