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Plea to Osborne as Northern Rock sale prepared

THE North East’s long-term interests must be considered in any sale of Northern Rock, says the MP whose constituency is home to the bank’s headquarters.

THE North East’s long-term interests must be considered in any sale of Northern Rock, says the MP whose constituency is home to the bank’s headquarters.

Newcastle Central’s Chi Onwurah also warned the Government against simply selling the bank for short-term interest amid speculation that Chancellor George Osborne could kick-start the sale of the Rock today.

The bank was nationalised in 2008 after its near-collapse in the credit crunch.

It was subsequently split into two – a mortgage and savings bank called Northern Rock plc and Northern Rock Asset Management (NRAM) to house so-called toxic loans.

The first part, consisting of its retail savings base and about 70 branches, is set to be sold. NRAM will continue to be owned by the taxpayer.

More than 100 MPs from across the political spectrum have called on the Treasury to give “equal and due consideration” to allowing Northern Rock to become a mutually-owned building society again.

But Mr Osborne is expected set out plans to sell the Rock in his annual Mansion House speech in the City of London today after advisers suggested a sale was the best option.

UK Financial Investments (UKFI), which oversees and advises ministers on Government bank stakes, was told by experts at Deutsche Bank that a sale would be the best option.

But Labour MP Ms Onwurah said: “George Osborne seems set on selling off Northern Rock to the highest bidder with value for money as the only criterion.

“Haven’t we learnt from the banking crisis that short term returns are not the only or the best way to run a bank or an economy? I urge Osborne and the UKFI to consider the best long term return to the country and particularly to the people of Newcastle and the North East who depend on the jobs and all the benefits of a local bank.

“We need a future for Northern Rock which involves the people of the region – many MPs believe that can be achieved through some form of remutualisation.”

Her comments came as a City source confirmed that Virgin Money was keen to hear what the Chancellor’s plans are for Northern Rock and his views on the disposal of hundreds of Lloyds branches.

The insider said: “They have always indicated their interest in both Lloyds and Northern Rock. So, they will certainly be awaiting what is in the speech with interest.”

 

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