Northern Rock chairman may quit, while share prices fall again
17 October 2007
Northern Rock chairman, Dr Matt Ridley, chief executive, Adam Applegarth, and non-executive directors Sir Ian Gibson and Sir Derek Wanless were questioned by the Treasury Select Committee this morning concerning the group’s recent struggles.
Dr Ridley revealed at the hearing that he would resign from the Newcastle-based company if the board believed it was in shareholders’ best interest. And, when the committee demanded to know why he was still holding on to his post, he replied that he had been working “night and day" to try to protect the bank from going under completely.
During the questioning, Mr Applegarth admitted that the bank had not run tests to see how it would deal with a "rapid, long-lasting closure of the financial markets" and blamed the “global liquidity squeeze” for the crisis.
And, in response to Peter Viggers MP’s question as to why Northern Rock was not insured against liquidity problems, Mr Applegarth replied that, although it had put some insurance in place, “clearly it was inadequate”.
Dr Ridley’s claims that the lender had been "hit by an unexpected and unpredictable concatenation of events" were rubbished by the committee’s deputy chairman, Michael Fallon.
Despite this, Sir Ian said that the company had provided “transparent data” throughout this difficult period and added that the bank is still in business, is solvent, continues to pay its staff, and will strive to continue to do this in the future.
A 20 per cent decline in share prices yesterday morning dealt a further blow for the company. Despite prospective takeover bids, including one from a Virgin-led consortium, shares fell after Virgin Money chief executive, Jayne-Anne Gadhia, said at the weekend that the brand was “dead”.
However, she also said that the company would continue to be based in the North East if its consortium was successful and that it would attempt to protect jobs, although "there can be no guarantees".
© Fair Investment Company Ltd