by Gary Webber
18. August 2009 13:41
...but building societies are crying 'foul' over unfair competition.
The Government's plan is to divide Northern Rock's business into two: one part keeping the 'good' business in order to attract private sector bidders, the other part taking care of the 'bad' business that got it into trouble in the first place.
Building societies think this is unfair, as it will introduce a competitor without the burdens associated with the credit crunch.
The European commission is investigating the Government's plans for Northern Rock this week. Attempting to protect its members against a new and unhindered competitor emerging, the Building Societies Association is urging the Commission that the healthy half of Northern Rock should pay financial penalties if the plans go ahead.
One thing's for sure: the government can't leave Northern Rock as it is, and with the banking sector not in the best of health, it'll probably be necessary to seduce bidders with some kind of restructuring.
However: the building societies have a cause worth sympathising with. They far less to blame for the credit crunch than banks are, and Northern Rock shouldn't get a free pass back into the market.
What do you think - how would you resolve the conflict?
Subscribe