Sandler plans to cut the size of the Rock

 

May 10, 2008

Northern Rock became one of the first high profile victims of the global credit crunch last year, when it was forced to take an emergency loan from the Bank of England to maintain liquidity, and then became the victim of the first run on a British bank in nearly 150 years. This was the start of a long line of problems for the Rock, which quickly entered into talks with various parties relating to the possibility of a private sale.

The talks with potential buyers were, however, unsuccessful, and as a result of this the bank was recently nationalised, passing into public ownership on a temporary basis according to government officials. The government also appointed a new boss for the bank, Ron Sandler, and he has now revealed that he plans to downscale Northern Rock considerably, with plans to shrink the bank to around half of its current size over the coming years.

The bank’s assets currently stand at around £107 million and Sandler said that by 2011 he planned to cut this down to around £50 million. The bank is also cutting back on custom, and has started to push customers whose special mortgage terms are due to come to an end soon onto other lenders. Sandler recently outlined a number of other moves that would be made in order to try and reduce the size of the bank.

He also went on to state that the bank would continue to make significant losses over the course of this year, and has recently revealed more accurate figures relating to the bank’s losses and debts stemming from this crisis. This included the fact that customers withdrew a great deal more of their savings from the bank at the time of the crisis than had been originally estimated.

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