Virgin bid for ailing bank, but temporary nationalisation is still the best option

4.00.00pm UTC (GMT +0000) Mon 26th Nov 2007

Vince Cable

Northern Rock has confirmed that it has chosen a consortium led by Sir Richard Branson's Virgin Group as its preferred buyer for the stricken bank. Virgin's offer - which has been backed by the Treasury - includes an immediate repayment of £11bn of the £25bn the bank owes the Bank of England. However the Liberal Democrats have repeated calls for the Government to take over control of Northern Rock, arguing that although a private buy out of Northern Rock which guaranteed that all tax payers' money would be repaid with interest within a fixed time period would be the most desirable course of action, this seemed highly unlikely, and as such temporary nationalisation is needed. Acting leader Vince Cable today called for trading in the bank's shares to be suspended. In a letter to Bank of England Governor Mervyn King, he has also asked for reassurances about the security of the loaned money and the interest rate being charged.

Acting Leader of the Liberal Democrats Vince Cable said "Taxpayers need to know whether Virgin will pay back their money in time and with interest. Safeguarding taxpayers' money should be the Government's highest priority. The Government should follow the least worst option and nationalise Northern Rock to safeguard taxpayers' money, and then sell the bank on in due course. Trading in Northern Rock shares should be suspended, as enormous positions are being taken on by the spivs and sharks in the City at the expense of the small shareholder. The Chancellor and Prime Minister have continued to dole out loans to Northern Rock while failing to provide any detail of them. This is simply unacceptable. I have now written to the Governor of the Bank of England to ask him to clarify the security offered on the loans and the level of interest payments being charged."