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Northern Rock Bosses Defend Actions
http://news.sky.com/skynews/article/...288523,00.html
Bosses at Northern Rock have been defending their positions to MPs who have been grilling them over the financial crisis that engulfed the mortgage lender.
Chief executive Adam Applegarth and chairman Matt Ridley blamed the turmoil in the global market for much of the bank's problems and said it could not have been anticipated.
Appearing before the Commons Treasury Committee, Dr Ridley insisted that the global credit crunch which led to last month's bank run could not have been foreseen.
But he faced accusations from angry MPs of making "basic banking errors" and of "clinging to office" after the bank was forced to turn to the Bank of England for emergency funding.
The bank had sought to diversify its sources of funding but it could not have predicted the worldwide closing of credit markets following the collapse of the US "sub-prime" mortgage market, he insisted.
"The idea that all markets would close simultaneously was unforeseen by any major authority," he said. "We were hit by an unexpected and unpredictable concatenation of events."
That drew a scathing response from Tory MP Michael Fallon, who demanded to know why he had not resigned.
"You are the chairman of the bank that ran out of money, that caused the first bank run in this country for 150 years.
"You have had to borrow billions of public money from the Bank of England. You have damaged the good name of British banking. Why are you still clinging to office?" he asked.
Dr Ridley said he was working "night and day" to turn around the situation at the bank.
"I serve at the behest of the board and if they think that they can do better by asking for my resignation, it will be available to them," he said.
The Newcastle-based bank had to seek emergency funding from the Bank in September after it was hit with soaring borrowing costs amid tightening global credit conditions.
Uncertainties following the collapse of the US sub-prime mortgage market had seen banks increasingly reluctant to lend to each other - shoring up the cost of short term interbank loans.
The resulting run on Northern Rock, as customers rushed to withdraw savings amid fears the bank might collapse, only eased when the Government guaranteed all deposits held by the group.
Meanwhile, Virgin Money boss Jayne-Anne Gadhia speaking on Sky News' Jeff Randall Live Show said on Monday night that she was confident her company would win the battle for Northern Rock.
http://news.sky.com/skynews/article/...288523,00.html
Bosses at Northern Rock have been defending their positions to MPs who have been grilling them over the financial crisis that engulfed the mortgage lender.
Chief executive Adam Applegarth and chairman Matt Ridley blamed the turmoil in the global market for much of the bank's problems and said it could not have been anticipated.
Appearing before the Commons Treasury Committee, Dr Ridley insisted that the global credit crunch which led to last month's bank run could not have been foreseen.
But he faced accusations from angry MPs of making "basic banking errors" and of "clinging to office" after the bank was forced to turn to the Bank of England for emergency funding.
The bank had sought to diversify its sources of funding but it could not have predicted the worldwide closing of credit markets following the collapse of the US "sub-prime" mortgage market, he insisted.
"The idea that all markets would close simultaneously was unforeseen by any major authority," he said. "We were hit by an unexpected and unpredictable concatenation of events."
That drew a scathing response from Tory MP Michael Fallon, who demanded to know why he had not resigned.
"You are the chairman of the bank that ran out of money, that caused the first bank run in this country for 150 years.
"You have had to borrow billions of public money from the Bank of England. You have damaged the good name of British banking. Why are you still clinging to office?" he asked.
Dr Ridley said he was working "night and day" to turn around the situation at the bank.
"I serve at the behest of the board and if they think that they can do better by asking for my resignation, it will be available to them," he said.
The Newcastle-based bank had to seek emergency funding from the Bank in September after it was hit with soaring borrowing costs amid tightening global credit conditions.
Uncertainties following the collapse of the US sub-prime mortgage market had seen banks increasingly reluctant to lend to each other - shoring up the cost of short term interbank loans.
The resulting run on Northern Rock, as customers rushed to withdraw savings amid fears the bank might collapse, only eased when the Government guaranteed all deposits held by the group.
Meanwhile, Virgin Money boss Jayne-Anne Gadhia speaking on Sky News' Jeff Randall Live Show said on Monday night that she was confident her company would win the battle for Northern Rock.
