Prime Minister hints at nationalisation of Northern Rock

10.00.00am UTC (GMT +0000) Wed 16th Jan 2008

Northern Rock

Gordon Brown has confirmed that nationalisation, with the aim of eventually turning the bank back over to the private sector, is an option being considered for Northern Rock. The Prime Minister also stepped up his involvement in the future of the bank, demanding personal updates from the Government's advisers at Goldman Sachs. At the extraordinary general meeting yesterday, Northern Rock's rebel shareholders failed to win key votes they hoped would block a fire sale of assets. SRM Global and fellow hedge fund RAB Capital also used the meeting to lay the blame for the crisis squarely with the Bank of England.

Liberal Democrat Shadow Chancellor Vince Cable said "If these proposals had been passed, any chance of a private sale, however remote, would have virtually disappeared. This meeting highlights the clear division of interest between speculative hedge funds and small shareholders who have already seen the majority of their share value wiped out. Northern Rock should be temporarily nationalised in order to guarantee the repayment of taxpayer loans. This would at least give the employees of Northern Rock a fighting chance of keeping their jobs."