Sants recommended take over of Northern Rock by Lloyds
14 June 2012
The retiring chief executive of the Financial Services Authority revealed yesterday that he had supported a taxpayer-backed takeover of Northern Rock by Lloyds Bank in late 2007 when the lender got into trouble, which was blocked by the Bank of England and found no support from the Government.
Hector Sants, who leaves the FSA at the end of this month after eight years, said he thought things would have been very different if the government and the bank had acted on his recommendation that they provide liquidity support to Lloyds to purchase Northern Rock.
The bank had to be nationalised in 2008.
According to analysts, chancellor Alistair Darling would now have ''new questions to answer'' over his role in the banking crisis after Sants' revealations.
The Scottish National Party – which is busy with its own campaign to address business concerns over its independence referendum – said it was ''extraordinary'' that Darling apparently ignored the advice of Sants, who believed that the run on Northern Rock could have been avoided.
Just before the crisis in September 2007, Sants recommended that the government help Lloyds take over Northern Rock, which was struggling against the credit crunch which was taking hold. The plan was rejected by Darling on the advice of Bank of England (BoE) governor Sir Mervyn King.