Private Northern Rock deal may not happen: Darling

British Chancellor Alistair Darling conceded today that it “may not be possible” to find a private buyer for stricken bank Northern Rock.

Amid mounting speculation that the British government may be forced to nationalise the Newcastle-based group, he told MPs turbulent money markets were putting off bidders.

“I would like to find a private-sector solution if that is at all possible; that may not be possible at the end of the day,” he told the Commons Treasury Select Committee.

“Given the current economic conditions, which are unusual, it is not surprising that a solution that might have been available two or three years ago is not immediately available just now.”

Mr Darling said it was nearing decision time for the future of the Bank, which was kept afloat by a £25bn (€33bn) taxpayer-funded loan after facing collapse last year.

He strongly defended the Government’s approach against a claim by senior Tory committee member Michael Fallon that ministers appeared to have “neither a policy nor a clue”.

In a dig at opposition parties, Mr Darling told him: “We are reaching a stage where we are going to have to reach a conclusion one way or another but I will defend to the hilt what we have done over the last few months because I believe it was the right thing to do and indeed, at the time, widely supported although I quite accept that some of those who supported it at the time are now running away from the support they once gave us.”

He said all options, including nationalisation, remained on the table.

“I think that all of us believe that a private sector solution would be highly desirable. Even many people who advocate nationalisation always point to it as being a stepping stone between where we are now to an ultimate private sector solution.

“But I think it is important that people understand that all options are on the table.”

Asked if he could guarantee taxpayers would get back all the money loaned to the bank, he said simply that “our intention is to make sure we get the money back”.

But he denied watering down his assessment of the potential cost to the public purse.

Asked about claims by a hedge fund which owns just under 10% of the bank that nationalisation of the bank for less than a fair price could breach shareholders’ human rights, he said investors, especially those who put money in after the problems were known, were aware of the potential dangers.

He told the committee: “Our principles are clear: we want to look after the depositors – that’s very important – and we want to make sure we get the money back that the Bank of England has lent.

“Shareholders, I think, always accept that if you buy shares they can go up or down. It is especially the case with some of the people who have been buying shares since Northern Rock got into this difficulty. They must have been aware that there were certain problems with this bank.

“People we see commenting are not people who do these things with their eyes shut; their eyes were very open indeed.

“The government will at all times behave properly but the Government has to look after the taxpayers’ interests and has to look after the depositors’ interests.”