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Government may do deal with banks to solve Northern Rock problem

Look out for a possible grubby deal between the government and the banks early in the New Year. The Guardian today (18 December) suggests that there could be a carve up of Northern Rock between various high street banks. But the banks will exact a price. See Guardian article.

In particular, near the end of the article:

"The banks which agreed to participate in any break-up plan would be expected to exact a price for their support. They would demand reassurance that they would not suffer financial loss as a result and hope to receive a sympathetic hearing from the government which has previously hit the sector with a range of reviews - starting with Don Cruickshank's industry-wide inquiry and culminating in capping overdraft charges - aimed at denting their profitability."

So could it all be sorted out before 14 January, the scheduled start of the test case; and the OFT decides to drop the test case and the banks are essentially allowed to continue with exorbitant penalty charges?

Update 17 February

Well, it took a bit longer than I thought. The test case happened although we are still waiting for the judge's decision. But now nationalisation has been announced. Still plenty of scope for grubby deals with the banks before the OFT sorts out the penalty charges issue. See Northern Rock nationalisation.


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Published and promoted by Bob Egerton, TR2 4RS