Northern Rock is to be nationalised, the BBC's business editor Robert Peston has learned.
Northern Rock is to be nationalised, the BBC's business editor Robert Peston has learned.
A consortium led by the Virgin group was leading bids to run the beleaguered bank, while a management buyout had also been considered.
A consortium led by the Virgin group was leading bids to run the beleaguered bank, while a management buyout had also been considered.
But ministers have decided that nationalisation - the first such move since the 1970s - was the only option.
But ministers have decided that nationalisation - the first such move since the 1970s - was the only option.
"They felt that the offers on the table did not offer enough to the taxpayer," Mr Peston said.
"They felt that the offers on the table did not offer enough to the taxpayer," Mr Peston said.
"It's a momentous moment. Nationalisation has become a dirty word associated with industrial failures of the past," he went on.
"It's a momentous moment. Nationalisation has become a dirty word associated with industrial failures of the past," he went on.
"Financial services, by contrast, have been considered the great British success story - so for such a seemingly growing bank to end up being nationalised is a big moment for the City and a big moment for the government."
"Financial services, by contrast, have been considered the great British success story - so for such a seemingly growing bank to end up being nationalised is a big moment for the City and a big moment for the government."
Northern Rock got itself into financial difficulties last year because its business model left it ill-prepared for the global credit crunch.
Northern Rock got itself into financial difficulties last year because its business model left it ill-prepared for the global credit crunch.
It was forced to ask the Bank of England for emergency funding, triggering the first run on a British bank in more than a century.
It was forced to ask the Bank of England for emergency funding, triggering the first run on a British bank in more than a century.
Uk taxpayers are now subsidisng the bank in loans and guarantees to other lenders by about £55bn.
The Treasury felt that nationalisation offered the most certiainty of securing these guarantees, Mr Peston said.
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