I’ve tried to keep out of the debate on Northern Rock, mainly due to the fact that whilst it is still considered by some to be a regional company, I feel it had lost its regional ethos some time ago. From my perspective then, it is just another (f)ailing company. However, today’s news that the Bank may be nationalised by Gordon Brown is a startling revelation. Whilst the solution was mooted as a “cure” at the onset of the crisis, nobody actually thought it would happen.
If this was a private market deal, the government would consider itself in receipt of an absolute bargain! With a substantial secured loan book and an extensive high street property portfolio, the Northern Rock was ripe for asset stripping. This is why Richard Branson acted like a carpet bagger, and this is why shareholders would have none of it.
Labour is faced with a very strange scenario. What does it do? Take control of the Bank, establish some stability and sell its controlling share three years down the line. Or does it grasp a marvellous opportunity to establish a nationalised bank whose main motive is not profit. It could offer low cost mortgages to first time buyers, newly weds, couples with children who need bigger homes, interest free loans to new businesses – the list is endless. All this would be secured by the income generated by the Banks existing portfolio.
In the right hands with the right planning strategy, the Northern Rock could become a national asset rather than a national burden. However, does Brown, Darling and Co, have the political will and commercial ability to see it through? Does the public actually want to see this happen?
Only time will tell.