Pressure grows to turn Northern Rock into building society
Friday, 13 November 2009 12:00
MPs across all parties have backed a motion to turn Northern Rock back into a building society.
The government is keen to return the nationalised bank to the private sector and the EU has approved the plan to split Northern Rock into 'good' and 'bad' banks.
However, a group of 97 MPs, including Liberal Democrat Treasury spokesman Vince Cable, have signed the statement urging the government to consider returning the bank to its original mutual status.
The Early Day Motion, brought by MP and former minister Malcolm Wicks, notes that not one of the demutualised building societies have survived as independent banks.
The motion "urges the government, as part of the restructuring of the banking sector, to enable and encourage the remutualisation of a significant part of it, including the conventional banking side of Northern Rock."
Building societies are limited in how much they can borrow from wholesale markets and are prohibited from taking on too many risky assets - rules that have helped protect many from the worst of the financial crisis.
The government is thought to be considering the proposal, but chancellor Alistair Darling has said he is not prepared to spend more on the institution to remutualise it.
Selling the bank would enable Northern Rock to pay back its loan to the government, an attractive proposition for the Treasury.
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