LONDON (Thomson Financial) - The former head of Lloyd's of London insurance market, Ron Sandler, said Saturday he has been appointed to lead troubled British bank Northern Rock PLC should it be nationalised.
'In the event of nationalisation, I have agreed I will go in as executive chairman,' Sandler said in a statement, explaining that his role would be 'to get things stabilised, to make sure the bank has proper plans in place.'
He would also be responsible for ensuring a management team was in place at the mortgage lender, he added.
Sandler is well-known to Prime Minister Gordon Brown and worked at the Treasury developing the government's pension and investment products for low earners -- and indicated that a private sector buyout is now not expected.
Northern Rock has been talking to Richard Branson's Virgin Group and the private equity firm Olivant, but there is speculation they cannot raise the funds to pay back billions of pounds in central bank loans.
Justin Urquhart Stewart, of Seven Investment Management, said he believed the bank 'will be nationalised by Tuesday', when shareholders meet for an extraordinary general meeting.
'The current structure is unworkable. Obviously they cannot do a deal with Virgin or Olivant,' he said.
'Rather than just assets being sold off, now is the time to go in and control it and manage assets down or run it as an ongoing business.'
Sandler was 'a safe pair of hands and a highly respected individual,' he added. 'He is close to the industry but suitably objective, he is not just a yes man.'
Northern Rock was forced to apply to the Bank of England in September for emergency funds to stay afloat following the squeeze on global credit caused by the crisis in the US sub-prime mortgage market.
That prompted worried customers to queue in their thousands to withdraw savings from branches across the country, in turn affecting consumer confidence in the banking sector.
The firm has since borrowed at least an estimated 25 bln stg of British taxpayers' money at a penal rate from the Bank of England.
The government has said it wants a private sale but nationalisation is an option. tf.TFN-Europe_newsdesk@thomson.com afp/ak COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.