Northern Rock bank run could have been avoided, says Hector Sants
Wednesday 13 June 2012
The outgoing head of the financial services regulator claimed today that the run on Northern Rock could have been avoided if his advice had been taken to help Lloyds TSB take over the ailing bank.
Hector Sants, who is stepping down as chief executive of the Financial Services Authority at the end of the month, said he urged the governor of the Bank of England, Sir Mervyn King, and the then chancellor Alistair Darling in 2007 to provide liquidity support so that Lloyds could buy Northern Rock.
But the support was refused and Northern Rock subsequently required a taxpayer-funded bailout to avoid collapse.
In an interview with the BBC, Mr Sants said: "I think things would have been different if the government and Bank had taken my recommendation that they should provide liquidity support to Lloyds to purchase Northern Rock.
"I think that would have made a difference, it would have avoided the queues at Northern Rock and it would have changed the general climate in relation to the old building society sector that had moved into the banking sector.
"So at that early stage, if we had avoided the Northern Rock problem, which we could have done through that action, then I think the tone and people's view of the UK banking sector would have been different."
Mr Sants also warned that the responsibilities of the Bank of England may be "just too great" for one person when the governor is handed powers to regulate financial services.
He backed Chancellor George Osborne's reforms to hand more powers to the Bank but cautioned: "We could be concerned that the operational task given to the governor as an individual - of course, that will be a new governor by the time the reforms come into place - is just too great... I'm comfortable with the powers given to the institution, but I would have a greater spread with how those powers are divided up."
Diving in at the deep end is no excuse for shirking the style stakes
- 2 Why I'm on the brink of burning my Israeli passport
- 4 War is war: Why I stand with Israel
- 5 Blackest is the new black: Scientists have developed a material so dark that you can't see it...
Ian Thorpe gay: Olympic swimmer comes out in Parkinson interview
Stephen Fry ‘criticises Operation Yewtree in dinner party rant’ calling for tougher laws to deter false sex abuse allegations
Israel-Gaza conflict: ‘Sderot cinema’ image shows Israelis with popcorn and chairs 'cheering as missiles strike Palestinian targets'
Israel-Gaza conflict: Israeli air strike destroys home for the disabled killing two women residents
Israel-Gaza conflict: Israeli PM says conflict may 'continue for a long time' as hundreds of Palestinians flee their homes
Sustained immigration has not harmed Britons' employment, say government advisers
War is war: Why I stand with Israel
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
Emergency data law: David Cameron plots to bring back snoopers’ charter
NUT strike: David Cameron announces crackdown on strike action ahead of mass industrial action
iJobs Money & Business
£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...
£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...
£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...
£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...