Northern Rock nationalisation 'about stabilisation', says new boss

The new boss of troubled UK bank Northern Rock today said nationalisation was not about running the bank “down to extinction”.

Ron Sandler, the Government’s £90,000 (€119,981)-a-month choice to head up the stricken Newcastle lender, said it was “all about stabilisation” and developing the bank into a profitable business.

The comments came as Gordon Brown defended the UK Government’s decision to nationalise Northern Rock as being in the best interests of the taxpayer.

Mr Sandler said: “I want to reassure staff that the process of temporary public ownership is a good thing. It gives the bank a period of stability and a chance to pull back from some of the forces that have buffeted it in previous months.

“My message to staff is a positive message.”

Mr Sandler, a renowned City trouble-shooter, remained tight-lipped on possible cuts among Northern Rock's 6,000-strong workforce.

But he confirmed that the bank would continue to operate under the Northern Rock branding and be run as aggressively as is possible under EU state aid rules.

Asked about how long the bank could expect to remain in public ownership, Mr Sandler said he was looking at a period of “clearly some years”.

He said: “I understand that other plans put forward spoke of a period of some years before the loans could be properly repaid and the bank returned to a situation where the Government guarantees had disappeared.

“I would imagine that the people who put those plans together have talked quite carefully about the forward trajectory.

“Therefore it doesn’t seem to me that those plans are unrealistic but I haven’t yet had the chance to shape my own plans and when I do I will have a clearer sense of the timeframe.

“I do think it’s clearly unrealistic to be talking about months – we are clearly talking about a period of some years.”