Nationalisation
On 17 February 2008, Alistair Darling, the Chancellor of the Exchequer, announced that Northern Rock was to be nationalised claiming that the private bids did not offer "sufficient value for money to the taxpayer" and thus the bank was to be brought under a "temporary period of public ownership".
The government is the sole shareholder through UK Financial Investments Limited, and the Bank is managed at "arm's length" on a commercial basis by an independent board under Ron Sandler. Customers are not affected by this change.
A Government-appointed arbitration panel will decide on a fair price for the compensation to be offered to investors for their shares. Prior to the markets opening on 18 February, trading in Northern Rock's ordinary and preference shares on the London Stock Exchange was suspended. The legal authorisation for the nationalisation is the Banking (Special Provisions) Act 2008, which also allows for the nationalisation of other banks if necessary. At 00:01 on 22 February Northern Rock was formally nationalised.
In November 2008 the government set up a new company, UK Financial Investments Limited, to manage their shareholdings in Northern Rock and Bradford & Bingley. On 10 March 2009 the Office of Fair Trading published their report on the impacts of public support for Northern Rock on competition in financial services. The OFT concluded that "public support for Northern Rock did not, during that period, have a significantly adverse impact on competition."
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