The U.K. government will nationalize Northern Rock Plc bank after a bid by Virgin Group Ltd. was rejected, Chancellor of the Exchequer Alistair Darling said today.
The government did not select either of two bids by a Virgin consortium and an in-house proposal.
The government has decided to bring forward legislation to take Northern Rock into a period of temporary public ownership,'' Darling said at a press conference today.
In the current market conditions, we do not believe that the two proposals deliver sufficient value for money for the taxpayer, he added.
Northern Rock suffered crippling losses related to bad investments in the U.S. subprime market. The bank began to experience funding difficulties last September and received 25 billion pounds in emergency funding to stay afloat.
Former Lloyds of London CEO Ron Sandler will manage the bank for the time being.
My objectives are clear: to deliver back to taxpayers the money they are owed and to revitalize the bank, Sandler said at the press conference with Darling. We will continue to operate on a normal commercial basis.