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Nationalising Rock not ruled out Nationalising Rock not ruled out
(about 1 hour later)
Prime Minister Gordon Brown has said no options had been ruled out when it comes to stricken bank Northern Rock - including nationalisation. Nationalisation is still an option for troubled lender Northern Rock, and the government is not ruling anything out, Prime Minister Gordon Brown has said.
Mr Brown faces calls to nationalise the bank whose aid package from public funds is now estimated at £57bn. Mr Brown also rejected suggestions that he ignored warnings that the Rock was in trouble and said everything possible was being done to secure its future.
He said they still hoped for a sale to a private company but added: "We do not rule anything out for the future." He is facing calls to nationalise the stricken bank, whose aid package from public funds is now estimated at £57bn.
And chancellor Alistair Darling, with the PM at his monthly news conference, said: "All options are on the table." But the prime minister said he still hoped for a sale to a private company.
On Tuesday, the Treasury expanded its guarantees on Northern Rock's liabilities, prompting talk that state ownership of the bank was a step closer.
"We are doing everything in our power to help Northern Rock find the right buyer for the future," the prime minister said.
"We do not rule anything out for the future."
Mr Brown said Northern Rock's collapse had been caused by an "unsound business plan".Mr Brown said Northern Rock's collapse had been caused by an "unsound business plan".
But he said the fact that its problems had not spread to other institutions showed the "tripartite" system - with the government, Financial Services Authority and the Bank of England, designed by him in 1997 was "working well". But he said the fact that its problems had not spread to other institutions showed the "tripartite" regulatory system of the government, Financial Services Authority and the Bank of England, was "working well".
Mr Brown designed the system and implemented it in 1997.
Rift deniedRift denied
The prime minister and chancellor denied any rift with Bank of England Governor Mervyn King and rejected suggestions that they had ignored warnings that Northern Rock was in trouble. The prime minister and Chancellor of the Exchequer Alistair Darling denied any rift with Bank of England Governor Mervyn King, and rejected suggestions that they had ignored warnings that Northern Rock was in trouble.
"The Governor and I and the chancellor are completely at one in both the way we deal with these events and analyse what's happened," said Mr Brown."The Governor and I and the chancellor are completely at one in both the way we deal with these events and analyse what's happened," said Mr Brown.
Pressed on whether Mr King had given the Government early warning of a possible run on Northern Rock, Mr Darling said: I don't think anyone wants to go back to the old system of seven or eight different regulators Alistair DarlingChancellor of the Exchequer
"That's simply not true and if you heard Mervyn King yesterday, giving his evidence (to the Treasury Select Committee), he refuted that suggestion." Mr Brown also denied that he was hesitating over appointing Mr King for a second term as governor, adding that an announcement would be made in due course.
Mr Darling said a package of reforms would be unveiled early next year "which I believe will improve the position, especially in relation to banks which might get into difficulty". The chancellor, who attended the press conference with Mr Brown, said that "wide-ranging" reforms would unveiled early next year that would help prevent banks from running into difficulties.
Mr Brown, who has invited his French and German counterparts to Downing Street for talks about the economic situation, defended the system he set up in 1997. "I don't think anyone wants to go back to the old system of seven or eight different regulators," he said.
"Of course it needs amending from time to time, but it is fundamentally the right framework," he said. Mr Darling blamed Northern Rock's problems on its business model.
"Northern Rock underwent a rapid expansion of its business that was totally dependent on being able to raise billions of pounds from the money market every day."
"Of course in the summer that became rapidly more difficult and then impossible for it."
SuitorsSuitors
The auction process for Northern Rock has been thrown into doubt recently, though two high-profile suitors remain, including preferred bidder Virgin Group. The auction process for Northern Rock has been thrown into doubt recently, though two high-profile suitors, Virgin Group and Olivant, remain.
Bradford & Bingley has approached Northern Rock about buying assets from the troubled lender, the BBC's Business Editor Robert Peston has learnt.Bradford & Bingley has approached Northern Rock about buying assets from the troubled lender, the BBC's Business Editor Robert Peston has learnt.
Although the mortgage lender is not looking to buy Northern Rock outright, Mr Peston said it could become part of a private sector rescue of the firm.Although the mortgage lender is not looking to buy Northern Rock outright, Mr Peston said it could become part of a private sector rescue of the firm.
Bradford & Bingley said that it was not actively pursuing a bid for any part of Northern Rock at this time, although it said it was one of several parties that received a copy of the bank's briefing memorandum.Bradford & Bingley said that it was not actively pursuing a bid for any part of Northern Rock at this time, although it said it was one of several parties that received a copy of the bank's briefing memorandum.
On Tuesday, the Treasury extended financial guarantees to Northern Rock at the lender's request, a move that analysts regarded as bringing the bank a step closer to nationalisation. On Tuesday, the Treasury offered to cover any loss by financial institutions that provide money to Northern Rock. It hopes the move will restore confidence in the lender and let it operate normal banking services.
It has offered to cover any loss by financial institutions that provide money to Northern Rock, so the bank can operate normal banking services.
The Treasury had already guaranteed savers' deposits held at Northern Rock, after September saw the UK's first run on a bank in living memory.The Treasury had already guaranteed savers' deposits held at Northern Rock, after September saw the UK's first run on a bank in living memory.