Northern Rock chairman Sandler says turnaround to take years
02.18.08, 9:04 AM ET
LONDON (Thomson Financial) - Ron Sandler, the veteran banker brought in by the government to chair nationalised lender Northern Rock, said turning around the stricken bank will take years.
'We are clearly talking about a period of years,' Sandler told reporters at a press conference held today at Northern Rock's Newcastle headquarters.
Sandler said the aim of the nationalisation programme was to revitalise Northern Rock and 'return it to the private sector as a vibrant, thriving enterprise.'
However, he declined to comment on whether any of Northern Rock's 6,000 employees will lose their jobs. There has been speculation that the bank could shed up to half its workforce as it scales back its activities in order to shore up its finances.
Sandler added that Northern Rock will likely keep trading under its existing name.
'I see no reason to believe that we cannot work forward with the Northern Rock brand.'
The UK Treasury announced yesterday that it had decided temporarily to nationalise Northern Rock, hours after two private sector bidders for the bank -- a consortium led by Sir Richard Branson's Virgin Group, and an in-house team led by Northern Rock director Paul Thompson -- had submitted their final proposals.
The Treasury said that neither proposal offered sufficient returns to the taxpayer. Northern Rock has received a 25 bln stg emergency loan from the Bank of England since the global credit squeeze left it unable to fund its lending activities in September last year.
The bank had funded up to 75 pct of its mortgage lending through borrowing on the wholesale markets.
Under the nationalisation programme, Northern Rock shareholders will be paid a sum to be decided through an independent valuation of the bank.
Northern Rock shares were suspended from trading this morning on the London Stock Exchange. The stock closed at 90 pence on Friday, valuing the bank at about 380 mln stg.
Ron Sandler is credited with restoring the fortunes of the Lloyd's of London insurance market in the late 1990s, and later became chief operating officer of NatWest bank, prior to its takeover by the Royal Bank of Scotland in 2000.
He is being paid 90,000 stg a month in his new role as Northern Rock chairman.
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