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Bishop’s plea to protect Northern Rock: CEN 12.14.07 p 4. December 16, 2007

Posted by geoconger in Church of England Newspaper, Development/Economics/Govt Finances, House of Lords.

martin-wharton.gifThe Bishop of Newcastle has urged the Treasury not to break up the Northern Rock, but to find a single buyer to take over the ailing financial institution.

Speaking in the House of Lords Dec 3 debate on the global credit crunch, Bishop Martin Wharton asked the Government if it would commit to keeping Northern Rock “intact and hence safeguard the jobs of 6,000 people? Does he agree that if the Rock were to be sold off piecemeal, it would cause incalculable damage to the north-east?”

Deputy Chief Whip Lord Davies responded that the government sought to save Northern Rock and to “ensure that it gets back on to a stable basis with exactly the significant advantages that the right reverend Prelate identified.”

However, there were larger issues at play, Lord Davies, said: “namely, the stability of the financial system and confidence in the banks. That is why it was necessary for the Bank of England to act as it did, while at the same time guaranteeing as far as possible the security of public moneys in Northern Rock.”

Speculation as to the fate of the ailing bank is rife, with the Bank of England on Monday denying it favored nationalization and a Treasury spokesman saying the government’s preferred option was a sale of the entire institution. However, “As the Chancellor said, we are looking at all options.”

The Newcastle-based bank has been forced to borrow £25 billion from the Bank of England over the past two months to stave off insolvency. Northern Rock is weighing rival bids from a consortium led by the Virgin Group and the investment firm Olivant for its assets. A final deal is unlikely before the New Year, Northern Rock Chairman Bryan Sanderson said.

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