BBC NEWS | Business | Northern Rock to be nationalised Northern Rock to be nationalised The Chancellor said the public would gain after the market improved The crisis in graphics Northern Rock is to be nationalised as a temporary measure, Chancellor Alistair Darling has said. Neither of the two private proposals to take over the beleaguered bank offered "sufficient value for money to the taxpayer", Mr Darling said. He said the public would gain if the government held on to Northern Rock until market conditions improved. Ron Sandler, nominated by the government to run Northern Rock, said savers' deposits would be secure. 'Dither and delay' But shadow chancellor George Osborne told the BBC that the Conservatives would oppose plans to nationalise Northern Rock. "After months of dither and delay we have ended up with this catastrophic decision," said Mr Osborne. "We now have the situation where the government will be making decisions on whether or not to foreclose on people's loans in a falling housing market," he added. The Government is totally financially inept and I certainly wouldn't give it the keys to my piggy bank Armand Borisewitz 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. Virgin boss Sir Richard Branson criticised the government's decision: "We believe we had a very strong proposal, an experienced team and one of Britain's best brands. "We believe nationalisation is not the right answer and that a commercial solution would have been the best way forward." Ill-prepared Explaining the government's decision, Mr Darling said: "It is better for the Government to hold on to Northern Rock for a temporary period and as and when market conditions improve the value of Northern Rock will grow and therefore the taxpayer will gain." "The long-term ownership of this bank must lie in the private sector". 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. The bank will be run at arm's length and on a commercial basis Alistair Darling Nationalisation will be pushed though parliament with emergency legislation on Monday. Shares in Northern Rock will be suspended on Monday morning.

Under nationalisation rules, shareholders will be offered compensation for their holding, at a level set by a Government-appointed panel. Investors could begin legal action if they are unhappy with the amount offered, with BBC Business Editor Robert Peston saying that it was "inevitable" that the government would be sued by shareholders who felt they had been "fleeced". Job threat UK taxpayers are now subsidising the bank in loans and guarantees to other lenders to the tune of about ï¿½55bn. The Treasury now feels that nationalisation offers the most certainty of securing these guarantees, Mr Peston said. It is thought that the business model it proposes will be similar to those put forward by the Virgin Group and the in-house management consortium. These were likely to see a downsizing of the bank, with job cuts among its 4,300 employees likely, observers say. Ron Sandler says it will be "business as usual" at the bank The Treasury had already recruited Mr Sandler, the former boss of the Lloyd's of London insurance market, to lead Northern Rock, in case it were nationalised. Mr Sandler is widely regarded as having restored confidence in Lloyd's after its years in financial disarray.

He said the changes would have no impact on the guarantees made to lenders, or the government-backed support for savers' deposits. "It is business as usual," he said. Mr Sandler is well known to Prime Minister Gordon Brown, and worked for the Treasury in developing the so-called stakeholder pension and investment products that were intended to help those on lower incomes save for retirement. Socialism Today - Nationalising Northern Rock Search Nationalising Northern Rock AFTER MONTHS of twisting and turning, desperately trying to avoid dreaded nationalisation, Alistair Darling, Gordon Brown�s finance minister, was finally forced to announce (17 February) the �temporary nationalisation� of Northern Rock. They really had no alternative. In reality, as Vincent Cable, the Lib Dem finance spokesman, had been pointing out all along, Northern Rock was effectively nationalised from the time that the government bailed out the bank with a �25 billion loan and guarantees of another �30 billion. The government could, of course, have declared the bank bankrupt and proceeded to sell off its assets to recover as much of the capital as possible. But that could easily have provoked a much wider crisis in the banking sector.

Instead, Darling, under pressure from Brown, desperately tried to find a private buyer for Northern Rock. But that �solution� would have rested on the government assuming all the risk through providing loans and guarantees, while the private purchaser could have potentially raked in a huge profit a few years down the road. Why did the New Labour government adopt such convoluted tactics to avoid nationalisation? "The reason for the prevarication was obvious enough", commented Philip Stephens. "Even after a decade in office, the New Labour government is haunted by the Old Labour symbolism of nationalisation. No one really thinks that Mr Brown wants to reclaim what the left used to call the commanding heights of the economy. But mention the 1970s and the prime minister still shudders". (Later not Sooner, Financial Times, 18 February) Although far from being a �socialist� measure, nationalisation remains the ultimate taboo for New Labour�s ex-social democrats. This is despite the fact that leading voices of big business, including both the Financial Times and The Economist, clearly accept that nationalisation is the only effective measure. The last hope of Darling and Brown was to sell Northern Rock to a consortium led by Richard Branson�s Virgin group.

Other prospective buyers, including the Olivant private equity group and Northern Rock managers attempting to organise a buy-out, dropped out of the running some time ago. Branson, however, was out for a super bargain at the taxpayers� expense. He was proposing to pay between �300 million and a maximum of �500 million in return for government loans and guarantees of �54 billion. If Virgin was successful in turning round the bank, Branson could have expected a profit of between �1-1.5 billion! The Economist aptly described this as a "one-way bet". "In the caustic phrase of Vincent Cable� to underwrite a private sale now would have been to retain the risk while privatising potential profits". (Financial Times, 18 February) The nationalisation of Northern Rock, while it shows the failure of market forces, is not a socialist measure. New Labour (and the sections of big business supporting nationalisation) clearly sees the measure as a temporary expedient to overcome the Northern Rock crisis. The bank will be run according to ruthless big-business methods with the aim of selling it back to the private sector as soon as possible.

Darling has appointed Ron Sandler as executive chairman on a salary of �90,000 a month (and no doubt many perks as well). Well known in financial circles, Sandler is a �non-dom�, that is a �non-resident� for tax purposes, paying no UK taxes on his offshore earnings. Darling claims that the bank will be run as a �going concern�, and will not be running down the business as some City figures are demanding (fearing �unfair� competition from a bank backed by government guarantees). It is already clear, however, that under Sandler the bank will attempt to reduce the scale of its operations. For a start, 3,000 jobs of Northern Rock employees are immediately under threat. The new management will attempt to reduce its outstanding loans from around �110 billion to something like �50 billion. Pressure will be exerted, one way and another, on Northern Rock mortgage holders to go elsewhere. It is far from certain, however, that Sandler, even with the advantage of government guarantees, will be able to turn the business round in three to five years.

The decline in house prices and a rise in mortgage arrears could have a devastating effect on Northern Rock, as well as other banks and building societies. In the last quarter of 2007 there was a 25% increase in Northern Rock arrears, affecting over 9,000 homes. Northern Rock is currently holding a pool of 1,100 homes that have recently been repossessed. This is only the beginning of Britain�s housing crisis. Another, truly scandalous, aspect of the government takeover only came out with the announcement of nationalisation. It turns out that at least a third of Northern Rock�s assets do not belong directly to the bank and are not covered by the nationalisation measure. These assets of around �45 billion (out of the total balance of �110bn) are invested in Granite, a Jersey-based trust. A number of commentators say that Granite holds the best quality assets, while more risky assets (for instance, 125% mortgages) are with Northern Rock itself. Cable commented: "What we are now being told is that in some way this has been hived off to the benefit of a person or persons unknown.

It appears to be not public ownership of Northern Rock but an asset-stripping operation designed to benefit whoever, we don�t know. This is a very serious development". "Northern Rock�s �assets�, says Cable, include unsecured debts, such as portions of mortgages in excess of the value of the properties concerned. �In other words, the rubbish�." (Evening Standard, 20 February) Former Conservative chancellor, Kenneth Clarke, said: "The best assets are in Granite. It looks as though there is a contract enabling more assets to be drawn in and it is the rubbish in the assets that we are now nationalising". Labour MP, John McDonnell, said: "The people who will gain are the participants in Granite, the people who will lose are the taxpayer and the Northern Rock workers who may lose their job as a result". Already, some Northern Rock shareholders are clamouring that their property is being stolen and they are demanding exorbitant compensation. Leading the pack are two hedge funds, RAB Capital and SRN, headed by the notorious asset-stripper, Jon Wood, a British multi-millionaire now based in Switzerland.

Both these funds hugely increased their shareholdings after the Northern Rock crisis broke (they currently hold around 20% of the equity), clearly seeking to profit from the situation. They are demanding that they should be compensated �4.50 a share, even though Northern Rock shares were selling for only 90p immediately prior to nationalisation. Moreover, given that the bank would have been totally bankrupt without government support, the shares were, in reality, worthless. Darling has announced that he will appoint an independent valuer who will calculate the value of Northern Rock shares on the assumption that the bank could not continue as a �going concern� � in other words, was effectively bankrupt. On that basis, the government would have to pay little or nothing to the shareholders. However, RAB Capital and SRN clearly calculate that if they threaten legal action against the government, on similar lines to the shareholders of Railtrack, they will force the government to pay over the odds in order to avoid the complications of lengthy legal proceedings. Railtrack shareholders claimed �4 a share and eventually settled for �2.50 � despite the fact that Railtrack was effectively bankrupt.

James Hamilton of Numis Securities commented: "We believe this value [of Northern Rock shares] to be very close to zero. However, we believe that a payment to shareholders will be made so that the government can avoid a Railtrack.2 situation". There is a strong case for the government considering reasonable compensation for Northern Rock employees and small shareholders who have put their life savings into Northern Rock shares. But there is no case at all for compensating predatory hedge funds which undoubtedly invested with a view to profiting from a �fire sale� of Northern Rock assets. Both big business and New Labour ministers are extremely touchy on the issue of nationalisation. The Financial Times accepted nationalisation as the "least bad of limited options" (Editorial, 17 February). For The Economist (18 February) it was similarly "the least worst of several poor options". Yet they clearly fear the implications of nationalisation, the necessity of which in the Northern Rock case demonstrates the failure of the market to solve all problems. Journals of big business were vehement in disassociating this nationalisation measure from any expansion of the state�s economic power. "The differences between this nationalisation and failed nationalisations of the past are clear.

Northern Rock�s spell in public ownership will be temporary. It will be managed at arm�s length� anybody who suggests that the Labour government has gone back to the 1970s socialism deserves ridicule. It has made a sensible, hard-headed, non-ideological choice". (Financial Times editorial, 17 February) "Critics who accuse the government of having reverted to its old socialist leanings of the 1970s", commented The Economist, "are plainly wrong". (18 February) Nationalisation carried out by past Labour governments was not �socialist� nationalisation: the state took over failed industries in order to manage them better in the interests of the wider capitalist economy. Nevertheless, big business resented this intrusion on its economic power and the increased influence that it gave to governments, especially Labour governments, which in the past could reflect the pressure of the working class. Today, advocates of ultra-free market capitalism are furious at the nationalisation of Northern Rock, even though it is presented as a one-off emergency measure.

Writing in the Financial Times (18 February), Tim Congdon, a right-wing economist, claims that unless the government distributes �1.5 to �2 billion to shareholders � which he calculates as the likely proceeds from future re-privatisation � the government�s nationalisation measure will be "legally invalid and morally outrageous", and a violation of the "principles of private property". The free-marketeers are particularly enraged that the nationalisation bill presented by Darling gives the government powers to nationalise any bank during the next twelve months. This is being denounced as a plot by Brown to grab huge chunks of the financial sector. Ludicrous, of course. Nevertheless, the twelve-month provision reveals that the government fears that other banks (possibly the already shaky Alliance and Leicester, or Bradford and Bingley) could follow Northern Rock, and they want to be armed with powers to bail them out more rapidly than in the case of Northern Rock. New Labour has renounced even the limited measures of past Labour governments. For instance, the government of Harold Wilson in the 1960s nationalised sectors of ship building and steel making in order to rescue these basic industries from bankruptcy. They continued to be run on capitalist lines.

A genuine socialist government would nationalise the major banks and finance houses as a key to controlling the economy. This would be the only way to avoid the catastrophic effects of a meltdown of the finance sector. To be effective, bank nationalisation would have to be carried out in conjunction with the nationalisation of the commanding heights of the economy, the major manufacturing monopolies, construction companies and transportation. Compensation would be paid to small investors on the basis of proven need. Nationalised companies would not be run by City financiers and big-business directors, but by democratically elected boards of management, with democratic workers� control. Then it would be possible to develop democratic, socialist planning of production in order to meet the needs of the overwhelming majority of society. The coming crisis of British and global capitalism will lead more and more people to seek an alternative to a system based on the brutal anarchy of the market and big business�s drive for profit. The socialist idea of economic planning under workers� control and management will increasingly appeal as the only viable alternative to capitalism. Northern Rock bank: What next? - History, news, analysis, predictions | This is Money Rock was told to up its mortgage lending as part of the bank bailout, part II.

14 October 2008 Adam Applegarth, former chief executive, and his co-directors will not be taken to court over their management failings, it emerged. 7 October Northern Rock has repaid more than half of the £28bn taxpayer loan it was given ahead of schedule. 21 September State-owned Northern Rock has been one of the main beneficiaries from uncertainty over the future of HBOS. 6 August Alex Brummer: Swapping debt for equity might help the Rock to rebuild the business but it also exposes the taxpayer to more risk. 13 April Hedge fund SRM Global will demand a Government explanation on how details of emergency loans from the Bank of England to Northern Rock were leaked to the BBC. 1 April The taxpayer could emerge from the Northern Rock nationalisation fiasco relatively unscathed, according to experts. 31 March Northern Rock paid for a 'ring of steel' to be thrown around former boss Adam Applegarth's home after he received threats from shareholders 31 March Northern Rock will more than halve in size following its nationalisation last month, according to its Government appointed chairman, Ron Sandler.

31 March The former boss of Northern Rock is entitled to a £760,000 payoff despite the bank being rescued by the Government. 24 February Financial Mail's Deputy Editor Simon Watkins explains the complex way Northern Rock plans to fund its future growth. 20 February The great Northern Rock bank run – Channel 4 News Share on Twitter It certainly looks like a bank run – the scenes in London today fulfilled the dictionary definition. And heading north to Nottingham, and Middlesbrough, the same extraordinary scenes: savers forming long queues to drain their life savings from Northern Rock. Banking is an industry built on credibility, confidence and trust, but the Rock looks wrecked even in its home town of Newcastle. Northern Rock in numbers - £113bn in loans and assets£24bn deposits, - 1.5m savers 800,000 people who bought their homes with the help of Northern Rock - £147m expected to be wiped off its profits - 37 per cent fall in the shares today/ Economics editor Faisal Islam said: “Today’s events are frankly unprecedented. This is no dodgy hedge fund or murky private equity company.

This is the fifth biggest lender in the fourth biggest economy in the world. “And the notion that savers up and down country would be queuing up to take out their savings is unthinkable, the stuff of financial nightmares, but it’s really happening.” Deposit guarantees should prevent this. But even after an extraordinary unlimited lending facility granted by the Bank of England and agreed by the Chancellor, customers preferred the sight of real cash. Financial revolutionary From its roots as a sleepy building society Northern Rock has emerged as a financial revolutionary aggressively innovating in its mortgage lending and borrowing. Despite its problems the bank is still solvent, it actually has half the proportion of delinquent mortgages on its books compared to other banks. This is no bailout of reckless lending, but the chancellor turning back on a tap of funding for its business model that had been blocked off by the US mortgage crisis. Chancellor Alistair Darling told Channel 4 News: “What’s happened here is the bank is doing part of its job. It is ensuring that Northern Rock has sufficient finances to do its business n the normal way. “All this stems from problems in the American housing market.

What’s happened is there’s plenty of money in the system, the banks have money, but at the moment the banks are not lending to each other in the way they usually do. “This has caused short term difficulties for Northern Rock. We want to ensure there’s a stable banking system and that’s why I authorised the Bank of England to make facilities available to allow Northern Rock to carry on doing business.” In the good old days, savers deposited their money with banks and building societies who then lent it to customers in the form of loans or mortgages. But only a tiny proportion of the money Northern Rock lends comes from its savers. Instead it’s turned to the money markets – borrowing from other banks and financial institutions at market rates. For years this business model has allowed Northern Rock to borrow cheaply – and in turn offer cheap mortgages – expanding its share of the mortgage business to nearly 20 per cent. But fears about US mortgage debt have paralysed the money markets, causing the rate at which banks borrow from other banks to soar and many institutions to stop lending altogether – which has left Northern Rock’s entire business model looking a bit broken.

“It’s risky business if the wholesale markets either become a lot more expensive, or dry up, and that’s what happened,” Dr Willem Buiter, former Monetary Policy Committee member, told Channel 4 News. “So they took a risk knowingly and they gambled wrong.” So now its the Bank of England offering a theoretically unlimited loan, at a penalty interest rate, secured against the value of Northern Rock’s prime mortgages. Talks had been going on for days. Channel 4 News understands that it had been borrowing its funding gap and rolling it over day to day. That was thought to be unsustainable when it appeared that stubbornly high interbank interest rates weren’t coming down. One bank’s crisis is another opportunity, but there are at least three other banks that pursued a similar strategy, though aggressively, whose shares have been panned on the markets. The Bank of England is clear today’s action was taken not to save Northern Rock, but to prevent wider serious economic damage. It’s done enough to keep Northern Rock trading normally for now, but it looks unlikely to survive as an independent company. For the Bank of England this is just the beginning of an unprecedented challenge a tightrope between financial stability and undeserved lifeboat rescues.

Northern Rock’s chief executive Adam Applegarth told Channel 4 News there had not been a run on the bank, but added: “We were certainly very busy today. You would expect after an announcement such as today you would certainly see a spike in volumes, and that’s what we’ve seen. “I’m sorry for our customers that are having to wait in order to be served, it is a busy time, but it is business as usual.” He said people could draw their money out if they wished, and added the business was also continuing to lend, but at a reduced level. He said the business was secure – one of the reasons why the Bank of England stepped in to help it with its “short-term liquidity crisis”. But there are questions over whether the politicians ought to have seen it coming, as Cathy Newman discovered. “The message coming out of Downing Street is there’s no cause for panic,” she said. “But the US credit crisis has already prompted some high street banks to raise interest rates. If indebted householders struggle to pay their debts that becomes a problem for this householder here. “Voters have rewarded Labour for a decade of economic good times.

Now, if the going gets tough, the government shouldn’t be surprised if it gets the blame.” Nationalising the Rock In September 2008 the Chancellor Alistair Darling has made a dramatic announcement that Northern Rock is to be nationalised. The chancellor said the government was forced to act after failing to attract private bids that would have given sufficient protection to taxpayers, who are now propping up the bank to the tune of £55 billion. Last autumn, the government stepped in to save the bank, until recently the fifth largest mortgage lender in the UK. Channel 4 News economic correspondent said the decision was one the government would have wanted to “avoid at all costs”. Chancellor Darling said: “The government has now completed it review of the two detailed proposals on the table and we have made our choice after considering all proposals. “In the current market conditions we do not believe the two proposals deliver sufficient value for money for the taxpayer, so the government has decided to bring forward legislation to bring Northern Rock into a temporary period of public ownership. “We have done so after full consultation with the Bank of England and the Financial Services Authority. “Northern Rock will continue operating as a bank on a commercial basis.

It will be open for business as usual tomorrow morning and thereafter. “Importantly, savers’ and depositors’ money remains safe and secure. The government guarantee arrangements I announced last year remain in place and will continue to do so. Borrowers will continue to make their payments in the normal way.” The Government will take the business from its current shareholders into public ownership. It will be run at arm’s length and the former Lloyd’s of London chief executive Ron Sandler has been chosen as executive chairman. Emergency legislation will be rushed through Parliament and a government-appointed arbitration panel will decide on a fair level of compensation for Northern Rock’s shareholders when the move is made, although this is likely to pave the way for a legal fight if investors are unhappy with what is offered. Robin Ashby of Northern Rock Small Shareholders told Channel 4 News: “I am shocked and appalled. This is no answer for anybody. “It’s absolutely not the answer for the taxpayer, or the government, or the country and its reputation as a financial centre.

It’s no good at all for the employees, it’s bad news for the Northern Rock Foundation, that relies on the profits to help charitable institutions, and it’s no good news at all for shareholders who face years of litigation to get a fair compensation for the money that’s been expropriated from them by the government.” “It’s not quite Black Wednesday, but it is a sorry Sunday. The wrong sort of history made today by the Treasury,” Channel 4 News economics editor Faisal Islam said, as £100bn of mortgage assets came onto the government’s books via Northern Rock. BBC NEWS | Business | Timeline: Northern Rock bank crisis Timeline: Northern Rock bank crisis Alistair Darling desperately wanted to avoid nationalisation Funding problems at Northern Rock, the country's fifth-largest mortgage lender, triggered the first run on a British bank in more than a century. After months of uncertainty, the stricken bank has been nationalised, while the debate over who was to blame continues. 5 AUGUST 2008 Northern Rock announces bigger-than-expected losses of ï¿½585.4m for the first six months of the year. Much of the loss came from the charges it takes to cover losses from struggling mortgage borrowers.

But it also managed to repay ï¿½9.4bn of its loan from the Bank of England, reducing the amount owed to ï¿½17.5bn. The government, which nationalised the lender in February after the first run on a UK bank in more than a century, will inject ï¿½3bn to help its finances. 30 JULY 2008 Northern Rock says it expects to make about 1,300 staff redundant - fewer than expected - as part of its restructuring plans. It hopes to limit the number of compulsory redundancies to 800, while 500 staff will leave voluntarily. The bank says it expects to be left with an estimated 4,000 staff. 23 JULY 2008 Northern Rock appoints the vice-chairman of Barclays, Gary Hoffman, as its new chief executive. Mr Hoffman replaces current chief executive Andy Kuipers, who will leave on 31 August after 20 years at the Newcastle-based lender. Mr Kuipers is the final member of Northern Rock's original board to leave the bank after last year's crisis.

12 MAY 2008 Northern Rock says the UK mortgage market remains "uncertain" and arrears have increased. The bank says mortgages in arrears for at least three months stood at 0.95% of total lending on 30 April, up from 0.57% on 31 December. 8 MAY 2008 Shareholders in Northern Rock launch a court challenge over compensation they are due to receive. The UK Shareholders Association (UKSA) submits an application for a legal review into the terms of the Rock's nationalisation. About 7,000 shareholders are backing the action, the UKSA says. 2 APRIL 2008 The EU says it will launch a full investigation into the UK government's bailout plan of Northern Rock. Under EU rules, public support can be allowed to stop firms from going bankrupt, but long-term government aid that is seen to undermine competition is not permitted. 31 MARCH 2008 Northern Rock publishes results for 2007 showing a pre-tax loss of ï¿½167.6m and says it will be "significantly loss-making" in 2008.

It also pledges to repay its ï¿½24bn state loan by 2010 and reveals that former chief executive Adam Applegarth will get severance payments totalling ï¿½785,000. 26 MARCH 2008 The Financial Services Authority admits failures in its supervision of Northern Rock but says it should continue to have responsibility for regulating the banking system. The FSA said there was "a lack of adequate oversight and review" by the agency of the troubled bank. It said too few regulators were assigned to monitor Northern Rock, which ran into trouble in September. The FSA said it would be overhauling its procedures as a result of the weaknesses identified. 19 MARCH 2008 Northern Rock says it will cut about 2,000 jobs and reduce its residential mortgage lending by half. The job cuts, which account for about a third of its staff, will be made by 2011 under plans to turn around the ailing bank's fortunes. The staff unions strongly protested the move.

6 MARCH 2008 The Northern Rock crisis could hurt the UK's financial services sector if it leads to any hasty new government regulations, the CBI warns. Its director general Richard Lambert says any "seismic" changes could be as harmful as the US Sarbanes Oxley laws brought in after Enron collapsed. And he said a government consultation document on reforming the banking system did not deal with all issues. 18 FEBRUARY 2008 Shares in Northern Rock are suspended. Prime Minister Gordon Brown says the decision to nationalise is "the right move at the right time" and is one which "protects savers" and is in "the best interests of taxpayers". Ron Sandler, the new chairman of Northern Rock, says it will take years for the bank to pay back its loans from the taxpayer but declines to comment on potential job losses. Chancellor Alistair Darling says the nationalised bank will operate "at arm's length" from the government and says the bill to begin the nationalisation process will be launched in Parliament on Tuesday. Shadow chancellor George Osborne tells MPs Mr Darling "is a dead man walking" and Conservative leader David Cameron says Mr Brown should remove Mr Darling from his role.

17 FEBRUARY 2008 Neither of the two proposals tabled for Northern Rock - one from a group led by Virgin and the other from in-house management - offer enough value to the taxpayer, Chancellor Alistair Darling announces. Therefore, he says, the bank will be nationalised. Ron Sandler is confirmed as the executive chairman of the Northern Rock. 15 FEBRUARY 2008 The board of Northern Rock, leading an in-house proposal to rescue the troubled bank, boosts its package, pledging to inject more cash into the bank by selling shares. The offer submitted to the government and regulators says it will inject ï¿½700m, compared with ï¿½500m in its original proposal. 12 FEBRUARY 2008 The Virgin-led consortium is told by the Treasury that it is the frontrunner to take control of Northern Rock, the BBC learns. But the Treasury sees nationalisation as a better outcome for the taxpayer and tells Virgin Group to improve the terms of its rescue plan. It wants Virgin to offer more for the billions in financial support being provided by the government and a bigger potential stake in Northern Rock for the taxpayer.

7 FEBRUARY 2008 Northern Rock will appear on government accounts, the Office for National Statistics decides. The move means the government may be at risk of breaking its rule to keep net debt below 40% of national income. The ONS stresses that the statistical change to public status should not be confused with nationalisation. 6 FEBRUARY 2008 Northern Rock bosses and union leaders criticise Virgin Group's plans to cut jobs at the troubled bank. The BBC learns that up to 1,000 jobs could go if the Treasury accepts Virgin's rescue proposals. Virgin abandons a commitment to no redundancies because government-backed bonds to be issued by Northern Rock have to be repaid within three years. Northern Rock's current management, which has submitted a rival plan, says it will fight to prevent job cuts. 4 FEBRUARY 2008 The deadline for offers for Northern Rock. Sir Richard Branson's Virgin Group and Northern Rock's own board both make rescue proposals for the bank. Sir Richard Branson felt it was his time to run the Rock.

They are the only two parties to submit proposals to the Treasury after investment fund Olivant pulled out, reportedly because the government wanted its ï¿½25bn of direct loans to Northern Rock repaid within three years. Under the terms of its rescue plan, Virgin would inject ï¿½1.25bn into Northern Rock and take a stake of 55% in the firm. Northern Rock's managers say their proposal - which gained shareholder backing - includes raising at east ï¿½500m, reducing the assets on the bank's balance sheet, and reorganising its operations. 26 JANUARY 2008 The Commons Treasury Committee says the Financial Services Authority was guilty of a "systematic failure of duty" over the Northern Rock crisis. MPs say the UK's financial watchdog should have spotted the bank's "reckless" business plan. They also call for the Bank of England to set up a head of financial stability. The FSA says it has already admitted failings in relation to Northern Rock and insists it is "addressing" them.

21 JANUARY 2008 Chancellor Alistair Darling announces a plan to convert Northern Rock's ï¿½25bn Bank of England loan into bonds before selling them to investors. The bonds would be guaranteed by the government to speed up a private sale of the troubled lender. Potential bidders are given until 4 February to come forward with rescue proposals based on the Treasury's plans. Northern Rock shares rise by about 42% on the news. 19 JANUARY 2008 The prime minister confirms that talks are taking place to secure a private sale of Northern Rock. But Gordon Brown also says he has not ruled out the possibility of nationalising the bank. One proposal suggested is to turn the billions of pounds of state loans made to Northern Rock into bonds, which would be sold. The prime minister backs the scheme which is the brainchild of bankers Goldman Sachs. 15 JANUARY 2008 The BBC learns that the government has got a plan in place should the Northern Rock be taken into public ownership. Legislation will be used, rather than the Treasury simply acquiring the firm in the conventional way, or allowing it to go into administration and then buying the assets.

Many felt it was only a matter of time until the bank was nationalised Earlier, about 600 Northern Rock shareholders attend a key meeting with management. They vote against proposals put forward by Northern Rock's two biggest investors, hedge funds RAB Capital and Monaco-based SRM Global, that would effectively prevent the bank negotiating a sale without consent from its shareholders. Northern Rock had urged shareholders to reject the resolutions - saying they would make securing a rescue deal much more difficult. 11 JANUARY 2008 Northern Rock agrees to sell ï¿½2.2bn, or 2%, of its mortgage assets to US investment bank JP Morgan. The price represented a 2.25% premium of the value of the assets, which BBC Business Editor Robert Peston pointed out was encouraging. It says it will use the funds to pay back some of the ï¿½25bn of emergency loans it has been given by the Bank of England. 8 JANUARY 2008 It emerges that SRM, a hedge fund that controls 9.9% of Northern Rock shares, has warned Alistair Darling not to consider nationalising the bank for less than a fair price.

In a letter sent to the chancellor before Christmas, SRM said it had been advised that otherwise there would be a breach of the Human Rights Act and it would have a strong case to pursue ministers through the courts. 4 JANUARY 2008 Chancellor Alistair Darling tells the Financial Times he is planning to give the Financial Services Authority more power to deal with failing banks to avoid another Northern Rock-style crisis. He proposes giving the FSA the power to seize and protect customers' cash if their bank gets into difficulties. 21 DECEMBER 2007 Northern Rock agrees to hold an emergency meeting for shareholders to discuss its sale process on 15 January. The meeting will be the first high-profile occasion for shareholders to grill management since the bank ran into trouble. Two of the bank's major shareholders are calling for restrictions on the board's ability to sell the company's assets or issue new shares. 13 DECEMBER 2007 Northern Rock announces that its chief executive Adam Applegarth has left the company, earlier than planned. 12 DECEMBER 2007 Olivant threatens to abandon its attempted rescue of Northern Rock, citing frustrations over the negotiation process.

Northern Rock is dropped from the FTSE 100 index of leading London-listed blue chips, in the biggest shake-up of the index since the dotcom crash in 2001. 7 DECEMBER 2007 The Olivant group, led by former Abbey boss Luqman Arnold, unveils plans of its rescue proposal and says it could repay immediately up to ï¿½15bn of government money that is propping up Northern Rock. 26 NOVEMBER 2007 Northern Rock names a consortium headed by Virgin Group as its preferred bidder. The Virgin offer includes an immediate repayment of ï¿½11bn of the ï¿½25bn the bank owes the Bank of England, with the remainder to be paid over the next three years. RAB Capital, which is the second-largest shareholder in Northern Rock with a stake of about 6.7%, says it will oppose the move from Virgin. 16 NOVEMBER 2007 Northern Rock announces that chief executive Adam Applegarth has resigned.

It says he will step down from his post once he has helped the lender complete the second phase of its strategic review, which is scheduled for completion no later than the end of January 2008. 12 OCTOBER 2007 A consortium led by Sir Richard Branson's Virgin Group puts forward a proposal to rescue Northern Rock. Under the plans, Northern Rock would keep its stock market listing but would be rebranded as Virgin Money. 9 OCTOBER 2007 The Treasury agrees to protect new savings deposited at Northern Rock. The decision extends the previous guarantee, made the previous month, which covered deposits made up to 19 September. The chief executive of the Financial Services Authority, Hector Sants, admits that there are "lessons to be learned" from the regulation of Northern Rock.

Appearing before the Treasury Select Committee, Mr Sants tells MPs: "In terms of the probability of this organisation getting into difficulty, we had it as a low probability." 1 OCTOBER 2007 Chancellor Alistair Darling announces that the scheme to protect savers with money deposited in UK banks is being expanded to guarantee 100% of the first ï¿½35,000 of savings. He adds that this is the first stage of a wider reform of the compensation system. 25 SEPTEMBER 2007 Northern Rock announces that it is cancelling the dividend that it was due to pay shareholders in October. This would have cost the bank ï¿½59m. The bank also says that it is in preliminary talks with people who want to buy all or part of its business. 20 SEPTEMBER 2007 Mervyn King was under pressure to defend his actions before MPs Mervyn King defends his handling of the banking crisis before MPs amid rumours that his job is on the line. Facing accusations of "being asleep at the wheel", Mr King said it would have been "irresponsible" to have intervened earlier to save Northern Rock.

He says he would have liked to have offered financial support to Northern Rock in secret but that UK and EU regulations made this impossible. 19 SEPTEMBER 2007 The Bank of England says it will inject ï¿½10bn into the money markets to try to bring down the cost of inter-bank lending. In another significant development, the assets that banks are allowed to use as collateral will be wider than usual, including mortgage debt. Critics accuse it of a U-turn and say it should have acted sooner to help Northern Rock. 18 SEPTEMBER 2007 The chancellor's move appears to have its desired effect as the queues gradually disappear outside most branches. In a series of newspaper adverts, Northern Rock says the firm has suffered "troubled times" but that "it will prevail and we will not let you down". 17 SEPTEMBER 2007 The sense of crisis surrounding Northern Rock grows as the queues at many of its 76 branches show no sign of dying down and the firm's shares plunge a further 40%. There are growing fears this will undermine confidence in the whole banking system.

Just before 1800, Chancellor Alistair Darling dramatically intervenes to try to end the crisis by agreeing to guarantee all deposits held by Northern Rock. He says savers will not lose a penny and that his action was motivated by the "importance I place on maintaining a stable banking system". It also emerges that the Bank of England had been in talks with Lloyds TSB about possibly buying Northern Rock, but these discussions had foundered. 14 SEPTEMBER 2007 Northern Rock says "extreme conditions" in financial markets forced it to approach the Bank of England for assistance. In a statement, the Bank, Treasury and FSA say they believe Northern Rock is solvent and that the standby funding facility will enable the bank to "fund its operations during the current period of turbulence in financial markets". Customers said they preferred to be safe rather than sorry Northern Rock boss Adam Applegarth stresses that it is "business as usual" for the firm. But their comments do not reassure either analysts or customers. The firm's shares plunge 32% in the City as worries about its future viability escalate. Meanwhile, queues begin to form outside a number of Northern Rock branches with hundreds of worried savers seeking to withdraw their money.

Experts point out that current legislation only protects savings of up to ï¿½33,000 - guaranteeing a maximum payout of ï¿½31,700 - in the event of a bank collapse. The bank's website collapses under the strain and all its phone lines are jammed. 13 SEPTEMBER 2007 The BBC reveals that Northern Rock has asked for and been granted emergency financial support from the Bank of England, in the latter's role as lender of last resort. BBC Business Editor Robert Peston says Northern Rock is not in danger of going bust and there is no reason for its customers to panic. But he adds that "the fact it has had to go cap in hand to the Bank is the most tangible sign that the crisis in financial markets is spilling over into businesses that touch most of our lives". 12 SEPTEMBER 2007 Mervyn King says the Bank of England would be prepared to provide emergency loans to any bank that ran into short-term difficulties as a result of temporary market conditions. But he appears to rule out following the lead of the ECB and US Federal Reserve in pumping huge sums into the banking system to ease the liquidity drought.

4 SEPTEMBER 2007 The rate at which British banks lend to each other - known as the London Interbank Offered Rate (Libor) - rises to its highest level in almost nine years. The three-month loan rate hits 6.7975%, above the Bank of England's emergency lending rate of 6.75%, suggesting that banks are reluctant to lend money to each other. 14 AUGUST 2007 Bank of England governor Mervyn King is alerted to the potential impact of the global credit squeeze on Northern Rock's business in a phone call with officials at the Financial Services Authority (FSA) and the Treasury. 9 AUGUST 2007 Global credit concerns are ignited by French bank BNP Paribas' decision to suspend three of its investment funds with exposure to the troubled US sub-prime market. Share prices fall sharply as banks curb lending to each other and the European Central Bank (ECB) injects 94bn euros ($130bn; ï¿½65bn) of liquidity into the European banking system.

25 JULY 2007 Northern Rock issues an upbeat set of trading results, saying the outlook for the business is "very positive". Problems on the global money markets hurt Northern Rock It reveals it has sold mortgages worth a record ï¿½10.7bn in the first half of 2007, up 47% on the same period a year before. This is equivalent to 19% of all new mortgage policies sold over that time, making it the market leader in the UK. Interim profits are up 0.7% to ï¿½296m and the firm pledges to boost its dividend - its payment to shareholders - by 30%. It notes that "sharp increases" in borrowing rates in the money markets are likely to make life more difficult and that changes in "interest rate and credit risk environments" will influence the size of its annual profits. But it says its assets have grown 28% to ï¿½113bn, its new residential lending remains "low risk" and that sales growth from its core mortgage business remains good.

Northern Rock hires Barclays' Gary Hoffman as new chief executive - Telegraph Northern Rock hires Barclays' Gary Hoffman as new chief executive Gary Hoffman has the huge challenge of running Northern Rock By Philip Aldrick, Banking Editor 11:20AM BST 23 Jul 2008 Northern Rock, the nationalised mortgage lender, has hired the vice chairman of Barclays bank to take over as its new chief executive. Gary Hoffman, 48, who joined Barclays 26 years ago and was made vice chairman in July 2006, will replace Andy Kuipers from the start of October. Mr Kuipers, one of the few original Northern Rock executives to have remained with the bank under public ownership, is expected to leave. Mr Hoffman's appointment will also release Ron Sandler from his executive chairman responsibilities. Mr Sandler was parachuted into the bank by the Treasury when it was nationalised in February this year and said at the time he planned to revert to a non-executive role after a recruiting a permanent chief executive.

Mr Hoffman will assume responsibility for halving Northern Rock's £100bn mortgage book, repaying the £25bn Bank of England loan by 2010 and releasing the Government from its £75bn of guarantees the following year. He will also have the uncomfortable task of making a third of the 6,000-strong workforce redundant. Mr Hoffman is the most senior in a spate of recent hires at the bank, following the appointment of Rick Hunkin of GE Money UK Home Lending to the newly-appointed role of chief risk officer and Richard Smelt as the new HR director. Mr Sandler said the appointments "further strengthen our executive team". The appointment will trigger a recalculation of Mr Sandler's remuneration package. He has been on a fixed £90,000 a month salary but intends to introduce a new scheme that incentivises executives against their success in repaying the Bank loan and releasing the Government from its guarantees. Ann Godbehere, the former Swiss Re financial officer, will remain finance director. She is currently on £75,000 a month.

Mr Hoffman received £1.15m in pay and bonus last year and has share awards worth another £3.5m. He has accrued a £2.6m pension pot that will pay an annual pension of £253,000 when he retires. At Barclays, Mr Hoffman previously held the role of chairman of UK banking and of Barclaycard and prior to that chief executive of Barclaycard. He joined the Barclays board on January 1, 2004. Northern Rock is believed to have had a large degree of success in attracting new savings deposits since the Government provided a cast-iron guarantee and, when it reports its annual results in early August, is likely to reveal that only £19bn of the Bank loan remains outstanding. Northern Rock - How a Problem became a Disaster ? Northern Rock - How a Problem became a Disaster ? 6 March 2008 Northern Rock has been a cloud over the UK financial sector since it ran out of cash in August 2007. This was due to the fact that most of its funds were being raised in the wholesale market, that is from other financial institutions rather than deposits from retail customers.

The problems of the US subprime mortgage crisis, to which most UK banks remain exposed, dried up Northern Rock's funding. This business model of financing rapid growth on the basis of short term borrowing from the wholesale market assisted Northern Rock to develop from a regional lender to a major player in the UK mortgage market. They had achieved a 22% share of new mortgages taken out in the first 6 months of 2007. North Cyprus Investment By mid November, the crisis had grown and the Bank of England had been forced to improve liquidity in financial markets, that is, print money and make it available for other banks. The Governor also announced a series of auctions whereby the Bank would lend £40 billion to financial institutions at an interest rate of 6.75%. There were no takers for this last initiative. This was due to the high interest rates, but also to the fact that no bank wished to have the inevitable adverse publicity of being forced to approach the Bank of England for assistance. It should be recalled that the run on Northern Rock was triggered by a leak to the media. The announcement of a government guarantee to depositors provided a breathing space during which interested parties could prepare bids for Northern Rock.

There were 3 bidders, the favourite being the Virgin proposal, promoted by Sir Richard Branson. It was generally felt that the Virgin bid was too advantageous to Sir Richard at the expense of the UK taxpayer. The prospect of �obscene' profits for Virgin prompted the Prime Minister, Gordon Brown, to announce nationalisation in mid February 2008. The handling of the Northern Rock saga reflects badly on all the parties involved. While the management must take responsibility for the risky business model, they were helpless in the face of the global credit crunch. Once they had disclosed their problems to the FSA, then the public agencies took control of the situation. However, the suggestion that any public body �took control' is a sad joke. The drama moved from the boardroom of Northern Rock in Newcastle to the tripartite regime established by Gordon Brown while he was Chancellor of the Exchequer during the Blair years. The parties in the tripartite regime are the Bank of England, the Financial Services Authority, and the UK Treasury. The Bank of England lectured on moral hazard, the FSA claimed to be powerless, and the Treasury dithered.

Gordon Brown repeatedly claimed during the successive Blair governments that the relative prosperity of the UK, and the success of London as an international financial centre, was due to his vision of a tripartite regulatory regime, with an independent Bank of England at the centre. It is true that London overtook New York as the leading global financial centre, but this is due to the efforts of those employed in the City and the negative impact of restrictions imposed on the financial sector in New York. The bankruptcy of Enron in 2001 and subsequent criminal prosecutions further weakened New York as a financial centre. Northern Rock was the first real test that the UK regulatory bodies had faced since the secondary banking crisis of 1973. By any yardstick, the tripartite regime was a dismal failure. The run on Northern Rock was triggered by a media leak, allegedly from the tripartite regime, and the reaction of the regime was lamentable. The media seized the story with glee, and the tripartite regime looked on in horror while the queues of depositors formed outside Northern Rock branches.

Harry - a news blackout for 10 weeks This can be compared with the news blackout on the deployment of Prince Harry in Afghanistan, which lasted for 10 weeks. The fact that the Prince had been posted to Afghanistan during December 2007 and that the UK media had unanimously agreed to suppress the story is breathtaking. The UK media are well known for taking perverse pleasure in broadcasting embarrassing moments of 'celebrities'. They consider this justified, based on the cherished concept of freedom of the press. However, it is an ominous sign in an open society when the media colludes en masse with the government in suppressing a news story, unless there are powerful and compelling reasons to do so. In fact, Prince Harry's deployment was reported in the Australian publication 'New Idea' on January 7 and in the German paper Bild on February 27. It is well known that some members of the Taliban are voracious readers, albeit of the Koran, but they may well have picked up the story from these publications. To suggest that Prince Harry's presence in Afghanistan should be suppressed on the basis of the 'public interest' or 'national security' is farcical.

If publicity of his presence were deemed to put other soldiers at heightened risk, then this raises the suggestion that he should not have been sent there. One would suggest that a similar period of confidentiality surrounding the problems of Northern Rock would have led to a resolution of their difficulties. The fact that the UK media conspired to suppress the Prince Harry story but exposed the problems at Northern Rock with glee is a sad reflection of contemporary UK culture. The financial standing of the UK banking industry is infinitely more important than a young man's desire to experience active service as a soldier. More to the point, the British Establishment was more concerned with the security of a member of the royal family than with the integrity and international reputation of the UK banking industry and the City of London. This episode clearly demonstrates how the Establishment prioritises and promotes the Royal Family and devalues the economic capability of the UK. Another unfavourable comparison is that with the French banking crisis at Societe Generale. This crisis was occasioned by a rogue trader who caused losses of US$ 7.26 billion, rather than the global credit crunch.

Daniel Bouton waives 6 month's salary Jerome Kerviel was the rogue trader, in the Nick Leeson mould, who resorted to illegal means in order to conceal his huge trading losses incurred in financial futures. Mr Kerviel apparently turned a profit during 2007, but in January 2008 he bet that the German DAX and the Dow Jones Euro Stock indices would rise. Unfortunately, they fell. The bank liquidated his positions in mid January 2008 and he is currently remanded in custody by the French authorities. However, as soon as news broke in January, the French authorities stepped in. As well as providing funds, they also warned off foreign predators. This makes a mockery of EU rules, but the French always have a healthy disregard for EU regulations when their own national interest is threatened. The bank has been rescued by a rights issue of US$ 8.4 billion. The one-for-four rights issue has been completely taken up by shareholders and the company share price has started recovering. The Chairman of Societe Generale, Daniel Bouton, has personally invested US$2.2 million in the rights issue. He has also waived his bonus and six month's salary.

This episode further discredits the UK government's handing of Northern Rock. The French authorities reacted quickly and decisively to prevent a foreign takeover of the bank, and the funding shortfall was resolved within weeks by a fully subscribed rights issue. Ron Sandler earns £90,000 per month The commitment of Messr Bouton should also be congratulated. This contrasts markedly with the UK, where the government has appointed Ron Sandler on a salary of £1.1 million per annum to run Northern Rock. He was born in South Africa, but was educated at Cambridge and started his rise to fame as a management consultant. He is credited with having masterminded the turnaround at Lloyds of London when they were facing bankruptcy by large exposure to asbestos claims in the USA.and Nat West. He has resigned as non executive chairman of Computacentre in order to focus on Northern Rock He was commissioned by Gordon Brown to write a report on the long term UK savings industry in 2001, but very few recommendations have been implemented. Mr Sandler is allegedly non domiciled in the UK for tax purposes. Based on their failure to monitor and regulate the banking sector, the UK government has nationalised Northern Rock.

For some inexplicable reason, they believe that while they were unable to regulate the bank, they will now be successful in managing the bank, attracting lenders, and returning it to the private sector. Copyright - Leslie Hardy, 6 March 2008 Northern Rock sold to Virgin Money - BBC News BBC News Northern Rock sold to Virgin Money 17 November 2011 Media captionChancellor George Osborne said: "We are creating a powerful new presence on the High Street" Northern Rock is being sold to Virgin Money for £747m, the government has announced . The bank was nationalised in 2008 following its near collapse at the onset of the global credit crunch. Northern Rock plc will be rebranded as Virgin Money, which has pledged no compulsory job cuts for three years. BBC business editor Robert Peston said the sale would see taxpayers end up with a "paper" loss of somewhere between £400m and £650m. The bank currently employs 2,500 people, down from 5,500 when it was nationalised.

On nationalisation, the government subsequently split the bank into two, Northern Rock plc, and Northern Rock (Asset Management), into which was placed its bad debt. Sources at Northern Rock told the BBC that there were cheers at the bank's Newcastle headquarters when the news of the Virgin Money deal was announced. Taxpayer loss The government said Northern Rock customers would see no change to their accounts and services and would not need to take any action. What perhaps is most interesting is that the chancellor has decided to crystallise the loss now, rather than suspend the sale in the hope that markets recover enough to break even on the deal By Robert PestonBusiness editor BBC business editor Robert Peston said taxpayers had injected £1.4bn into Northern Rock plc. He added that, in addition to the immediate £747m the government would get back following the completion of the sale, there was the potential for the Treasury to receive a further £280m over the next few years. The size of the potential losses contained in the bad bank part of Northern Rock is still uncertain and it still owes the Treasury £21bn.

'Safeguards jobs' Chancellor George Osborne said: "The sale of Northern Rock to Virgin Money is an important first step in getting the British taxpayer out of the business of owning banks. "It represents value for money, will increase choice on the High Street for customers, and safeguards jobs in the North East." The sale of Northern Rock plc is expected to be completed on 1 January 2012. The government said it had no plans to sell Northern Rock (Asset Management). Virgin Money has pledged to maintain its operational headquarters in Newcastle, where Northern Rock is based. It has also agreed not to close any branches and instead to increase their number "as the business' growth allows", and support Northern Rock's charitable foundation for a year. In addition to paying £747m on completion of the sale, the government said Virgin Money was "expected" to pay an additional £50m within six months, and then a further £150m. If Virgin Money sells or lists the combined business on the stock exchange in the next five years, it will have to pay the government an additional £50m to £80m.

Virgin Money chief executive Jayne-Anne Gadhia confirmed to the BBC that the bank intended to float its shares on the stock market within two to five years. Media captionJayne-Anne Gadhia, chief executive of Virgin Money: "We think we have made a great offer" She added: "The great thing about this business combination is that the two businesses lock together very well. "Virgin Money has credit cards, insurances and investments, and Northern Rock has mortgages, savings and current accounts. "There is no need for any jobs to be merged together, in fact this is a story for growth." 'Message of confidence' Ron Sandler, Northern Rock executive chairman, said: "The return of Northern Rock to the private sector has always been one of our key objectives. "We said that this would be done at the right time and when there was a proposition in the best interests of taxpayers and other stakeholders. "It is a very positive outcome for the company following a significant restructuring process." The Unite trade union said it hoped the announcement of the sale to Virgin Money "will be the start of a secure future" for Northern Rock's workforce.

The leader of Newcastle City Council, Nick Forbes, said it was "delighted that the future of Northern Rock has now been decided". Northern Rock timeline 1965: Northern Rock Building Society founded after merger of Northern Counties Permanent Building Society and Rock Building Society 1997: Northern Rock goes public September 2007: The BBC learns the Bank of England has given Northern Rock emergency financial support. Its shares drop 32% in a day and customers queue to withdraw their savings November 2007: Virgin says it would be interested in taking over the bank February 2008: Northern Rock is nationalised, the first such case since the 1970s. Chancellor Alistair Darling calls it a "temporary measure" December 2009: The UK government splits Northern Rock into a "good" bank and "bad" bank, paving the way for a sale of its "good" assets to a third party June 2011: Chancellor George Osborne confirms that he will sell Northern Rock to a single buyer November 2011: Northern Rock plc is sold to Virgin Money for an initial £747m.

"The decision by Virgin Money to make Newcastle their home sends a message of confidence in our city and the wider North East," he said. Adrian Coles, director general of the Building Societies Association, said the announcement of Northern Rock's sale was a "bittersweet moment". "On the plus side, de-nationalising this bank is a positive step. However, we would have welcomed Northern Rock's return to the mutual sector after 14 years' absence," he said. "Northern Rock had over 100 years as a successful building society, but only 10 years as a plc bank before the queues formed outside its branches." A savings and mortgage bank, Northern Rock currently has more than 70 branches. The bank was formed in 1997 when the former Northern Rock Building Society floated on the London Stock Exchange. It was delisted following its nationalisation. Virgin Money had approached the Treasury about making a bid for Northern Rock back in 2008, but it was rejected. Virgin Money is part of Sir Richard Branson's Virgin Group.

Question: Who did the government appoint as executive chairman of Northern Rock after its nationalisation?
Answer: Ron Sandler