Government plans to ‘nationalise’ Northern Rock

The government has made plans to effectively nationalise the struggling bank, Northern Rock, to protect its customers, it has been claimed.

Already, the Bank of England has loaned £23 billion to the bank, following a run on deposits – the first run on a British bank in many years.

In addition, the Treasury has promised to underwrite 100 per cent of all deposits in the bank, a commitment worth another £20 billion.

Although a number of companies are bidding to take over Northern Rock, Thisismoney claims to have learned that the Treasury is preparing plans to take the bank into public ownership.

Last night, chancellor Alistair Darling announced that the government will soon publish a statement on the principles affecting any takeover – which will give a critical insight into whether nationalisation, formal or informal, is likely.

In a letter to the chancellor, acting Liberal Democrat leader Vince Cable complained: “We are now in an absurd situation where banks can take ludicrous gambles with their customers’ money, knowing that if it all goes wrong the taxpayer will bail them out.”

Tags: Banking (Special Provisions) Act, run, banks, situation, liberal democrat leader