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Yorkshire Building Society in bid for Northern Rock

ONE of the country's leading building societies could try to take over Northern Rock if ministers opt to remutualise the bank.

Northern Rock
Northern Rock

ONE of the country's leading building societies could try to take over Northern Rock if ministers opt to remutualise the bank.

Yorkshire Building Society – the second biggest in the UK – has signaled a bid for the Rock could be possible under such circumstances, though it would need help from the Government to make a takeover possible.

Britain’s biggest building society, Nationwide, meanwhile, has ruled out a bid for Northern Rock.

The developments come after the Government agency UK Financial Investments (UKFI), charged with deciding the Rock’s future, last week told MPs that there was a “realistic” possibility of remtualisation.

Yorkshire Building Society boss Iain Cornish said he “absolutely” supported efforts by a cross-party campaign urging the coalition to take Northern Rock back to its mutual roots.

He said: “We would be more than happy to talk to the Government to see how we could assist in that process.

“That does not constitute mounting a bid, but I think it would be good for consumers and the sector and if there is anything Yorkshire Building Society could do to facilitate that, we would be keen to look at it.

“The difficulty in remutualising it is getting the best value for the taxpayer. In terms of Yorkshire paying hundreds of millions of pounds, it is not possible as we don’t have that level of excess capital.”

But he added: “If we were going to, we would have to have some sort of structure which would allow it to be bought over a period of time as we generate profit.

“But in terms of does Yorkshire have credentials in running a large building society which has a good track record? Yes, we do. We think we would have credentials in this space.

“They should definitely look at this as one of the options. I think that’s entirely consistent with what they said in the coalition agreement. Here’s a real opportunity to put their money where their coalition agreement is.”

A Nationwide spokesman said: “We have no plans or intention to put a bid in for Northern Rock if and when it does actually come up for sale.

“We are not sure what the plans are for it, but we have no intention of making any movement toward that.”

Last week, the Commons Treasury committee quizzed officials from UKFI about the remutualisation of Northern Rock.

Keith Morgan, UKFI’s head of wholly owned investments, said: “I think it is a realistic possibility. And I think the reasons for saying that is that we have to take account of value to the taxpayer, that’s what we have been asked to focus on.”

 

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