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Northern Rock under "public ownership"

18 February 2008

The troubled Northern Rock bank is to be nationalised under temporary government legislation, chancellor Alistair Darling has announced.

In a surprise move backed up by prime minister Gordon Brown, Mr Darling has been forced to take the bank into "temporary public ownership" as none of the other options on the table gave taxpayers "sufficient value for money".

Trading in Northern Rock`s shares has been suspended and a compensation package for shareholders will be offered.

All deposits made by customers with the Newcastle-based bank will be guaranteed, with Mr Darling stating branches will be operating "business as usual".

Private bids will still be encouraged by the government, after several were rejected, including one led by Virgin boss Richard Branson.

The Treasury had already recruited Ron Sandler, the former boss of the Lloyd`s of London insurance market, to lead Northern Rock, in case it was nationalised.

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