Northern Rock chairman quits

Northern Rock announced the departure of chairman Matt Ridley today and said the "time was right" to accept his resignation.

Dr Ridley leaves Northern Rock a month after the mortgage lender's liquidity crisis and the subsequent run on the bank.

He will be replaced by Bryan Sanderson, former chairman of Bupa and of Standard Chartered bank.

The news comes just days after MPs launched a scathing attack on Dr Ridley in a Treasury Select Committee hearing, demanding to know why he was "clinging to office" as head of the group that caused the first bank run in nearly 150 years.

Northern Rock said today that Dr Ridley had offered to resign in September as the crisis unfolded, but was asked to remain in place until new financing had been secured and after he had represented the group at the Committee grilling.

The group said: "He and the board now believe that the time is right to accept his resignation as a director and chairman of the company."

Dr Ridley will remain in place until his replacement, Mr Sanderson, gains relevant approvals from City watchdog the Financial Services Authority.

Dr Ridley, who received a salary of £300,000 last year, leaves Northern Rock after nearly three-and-a-half years in the role.

He first joined the group's board in 1994.

His father, Viscount Ridley, was also formerly chairman of Northern Rock, when the group was a building society.

The bank today refused to be drawn on details of any possible financial leaving package for Dr Ridley.

Northern Rock's annual report states that the non-executive chairman's contract is "terminable by the company at any time without liability for compensation".

The bank disclosed in the Committee hearing earlier this week that the entire board - including chief executive Adam Applegarth - had offered to resign amid the group's troubles.

Dr Ridley was accused of "damaging the good name of British banking" by the cross party group of MPs.

The bank's bosses said they were shocked and distressed by the series of events at the bank, but maintained that there was nothing more they could have done to prevent the crisis.

Dr Ridley told the hearing they were victims of an "unforeseen" meltdown in credit markets.

Newcastle-based Northern Rock was forced to turn to the Bank of England as lender of last resort in September after its funding lines dried up amid the global credit crunch.

News of the bank's funding problems led to a run on the bank, with an estimated £2 billion being withdrawn by panicked savers, which was only eased after the Government stepped in to guarantee deposits held by the group.

Northern Rock has so far drawn £13 billion in emergency funding from the Bank of England and said earlier this week that it may need to go back for more.

Its future is still unclear, with a firm takeover offer yet to appear.

A consortium led by Sir Richard Branson's Virgin unveiled plans at the end of last week to bring the lender into its Virgin Money business.

But Northern Rock warned on Monday that, while it was in talks with a number of potential suitors over a possible rescue deal, discussions were at a "very early stage".