UK Nationalizes Northern Rock

Bank takeover marks desperate move for British ministers
By Wesley Oliver,  Newser Staff
Posted Feb 17, 2008 12:52 PM CST
People walk pass a branch of Northern Rock bank in London. Chancellor of the Exchequer Alistair Darling said the U.K. government will nationalize Northern Rock Plc after negotiations to sell the struggling...   (Associated Press)
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(Newser) – British ministers plan to nationalize Northern Rock as part of a bold, desperate move to rescue the struggling bank, the BBC reports. Chancellor of the Exchequer Alistair Darling said two private bids to take over Northern Rock failed to offer “sufficient value for money to the taxpayer,” adding that London would only hold onto the bank until market conditions improve.

The government takeover could result in job cuts, analysts say. Taxpayers are already subsidizing the bank with loans and other guarantees valued at $107 billion. Shareholders will be compensated for their holdings, but they could sue if they’re unsatisfied with the government-set price, notes the BBC, whose business editor called nationalization “a dirty word associated with industrial failures.”