Northern rock facts
Formed in 1965 as a merger of the Northern Counties Permanent Building Society, established back in 1850, and Rock Building Society.
Based in Newcastle, in Britain's northeast, Northern Rock is the country's fifth largest mortgage lender, accounting for one in 13 U.K. home loans.
Has 76 branches and employs just more than 6,000 staff. Before a run on the bank in September, it had about 1.4 million savers, some 800,000 mortgage customers and assets totalling 113.5 billion pounds ($223.1 billion).
Marc Jones
Reuters News Agency
LONDON–Britain decided to nationalize Northern Rock yesterday, abandoning a five-month attempt to snare a private sector buyer for the ailing bank and piling more pressure on Prime Minister Gordon Brown.
It's the first major nationalization in Britain since the 1970s.
Britain's fifth-largest mortgage lender has borrowed 25 billion pounds (about $49 billion) from the Bank of England since its funding model collapsed in the credit crisis last year, sparking the first run on deposits at a British bank for some 140 years.
The Northern Rock debacle has become a major headache for Brown and his finance minister Alistair Darling, tarnishing the Labour government's popularity and denting the prime minister's reputation for being a guardian of financial stability.
Darling told a hastily arranged news conference that nationalization would be temporary and the bank would be returned to the private sector when markets stabilized. But it was the best option for protecting taxpayers.
"Market conditions will improve. Northern Rock's mortgage book is good but I think it would be a mistake for us to abandon this asset and take a loss now," he said.
"We had to intervene here, because if we let this bank fail there was every chance ... the problems would have spread into the wider British banking system," he said.
The mortgage lender already has been put on the government's books, classified as around 90 billion pounds of public debt.
The government will put forward legislation today to take the bank into public hands and trading in Northern Rock shares was suspended.
The opposition Conservatives said they opposed the move. "This is a day when Labour's reputation for economic competence died," Conservative spokesman for economic affairs George Osborne said. "We will not back nationalization. We will not let Gordon Brown take this country back to the 1970s."
Brown, who helped transform the Labour Party in the 1990s by ditching its previous attachment to state-ownership, is to hold a news conference at 11:00 GMT this morning.
Brown is now staking his reputation on markets returning to normal. The risk is that with the economy and housing market slowing and some banks still to reveal the full impact of the credit crunch on their balance sheets, Northern Rock's huge mortgage portfolio may struggle to find a buyer.
Day-to-day running of Northern Rock will now pass to Ron Sandler, a respected troubleshooter who rescued Lloyd's of London from the brink of collapse.
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