/ 19 October 2007

Northern Rock chairperson to resign

Britain’s Northern Rock on Friday announced the resignation of chairperson Matt Ridley following a turbulent period at the crisis-hit bank.

He will be succeeded by Bryan Sanderson, a former chairperson at British-based emerging markets bank Standard Chartered and healthcare firm Bupa, the company said in a statement.

Ridley’s resignation will take effect following Sanderson’s approval from the Financial Services Authority watchdog. A spokesperson for the bank said this was likely to take place “very shortly”.

Northern Rock ran into serious trouble sourcing credit in September, when it requested financial help from the Bank of England (BoE) — and faced the first run on a British bank in living memory.

The entire board of Northern Rock had offered to resign following the fiasco, it emerged earlier this week in testimony before a committee of British lawmakers.

“Matt Ridley made clear in September that he was willing to resign, but the board asked him to remain in his role as chairperson until the new funding arrangements were in place and until he had represented Northern Rock before the Treasury Select Committee,” Northern Rock said Friday.

“He and the board now believe that in the interests of all stakeholders in the company, the time is right to accept his resignation as a director and chairperson of the company.”

In recent months, commercial banks have become very nervous about lending cash to each other amid fears over possible exposure to the United States housing-market slump, creating a so-called credit squeeze.

Since the crisis unfolded at Northern Rock, the group has borrowed an estimated £16-billion of emergency funds at a penalty rate from the BoE.

The embattled group, meanwhile, faces takeover interest from US private equity firms JC Flowers and Cerberus, while Richard Branson’s Virgin Group wants to spearhead a consortium rescue plan.

Northern Rock is Britain’s fifth-biggest provider of mortgages or home loans. — AFP