From a Run on the Bank to the Finish Line

The British government announced a temporary nationalization of mortgage lender Northern Rock after deeming takeover offers insufficient to recompense taxpayers that balied out the bank.


Northern Rock struggled to stay afloat after it fell victim to the sharp rise in borrowing costs between banks and needed a government bailout after hundreds of depositors lined up to withdraw their money.

  • Feb. 22 2008 -- The UK Treasury announces it bought all the shares in Northern Rock, including its preference shares, and that an order setting up compensation for shareholders will be sent to parliament shortly. British lawmakers pass an emergency legislation allowing troubled banks to be taken into public ownership.
  • Feb. 21 -- UK Parliament passes legislation that will allow the government to make Northern Rock the first sizable bank to be nationalized in 25 years. The House of Commons approves of the nationalization legislation by a margin of 126 votes. The bill went back to the House of Lords, where its legislators initially rejected 3 provisions of the bill, then dropped their objections, and the bill has been given Royal Assent. British Prime Minister Gordon Brown says the government's nationalization plan for the lender will be 'completely' in line with EU aid rules. The Guardian reports that N. Rock shareholders have accused the government of rigging the valuation of the bank to avoid paying them compensation. The Times reports an offshore fund with charitable status called Granite has emerged as the first potential barrier to the nationalization of Northern Rock.
  • Feb. 20 -- UK government finds itself under new fire over the role of securitization vehicle used by Northern Rock to parcel up some of its mortgages.
  • Feb. 19 -- UK Chancellor of the Exchequer Alistair Darling is backed by Prime Minister Gordon Brown and other Cabinet colleagues over his handling of the N. Rock crisis. Shareholder SRM Global says it will pursue legal action.
  • Feb. 18 -- UK Prime Minister Gordon Brown faces grilling over the decision to nationalize troubled bank Northern Rock at a press conference taking place at 11 am London time; Britain's Chancellor of the Exchequer Alistair Darling said he will still listen to offers. "At the moment because of the state of the financial markets it is not an ideal time to try and deal with a bank in the situation Northern Rock finds itself in, but of course I very much hope that over the coming period people will look at it," he told the BBC. Darling is to announce new legislation allowing the government to take over the country's fifth-biggest mortgage lender. Shares in RAB Capital, one of Northern Rock's biggest shareholders, tumbled 9 percent in early trading, following the nationalization decision, shares in UK banks rose. Ron Sadler, rescuer of Lloyds of London, is to run the bank and heads to its headquarters in Newcastle, northeast England. Former Swiss Re executive Ann Godbehere will be chief financial officer.
  • Feb. 17 -- The UK government announces it is to temporarily nationalize Northern Rock. Darling rejects two private sector bids. Northern Rock's current public debt to the Bank of England stands at $49 billion.
  • Feb. 15 -- Northern Rock's share price stands at 90 pence per share, valuing the company at 379 million pounds ($745 million). Lawyers for hedge fund SRM Global, the biggest shareholder in Northern Rock, delivered a report to the government saying the Treasury needed to reassess the criteria it used for rescue proposals, as it had wrongly applied the rules of the European State Aid regime to its emergency funding.
  • Feb. 13 -- British government asks Virgin Group and "in-house" management team to improve their bids for the ailing lender.
  • Feb. 11 -- RAB Capital said it purchased a further 120,000 shares in Northern Rock at 96.19 pence per share and now holds 34,264,299 shares, representing 8.13 percent.
  • Feb. 10 -- Royal Bank of Scotland, Barclays and Citigroup offer to securitize half of the Bank of England's emergency loan to Northern Rock, The Sunday Telegraph reports.
  • Feb. 8 -- Northern Rock is to cut its 113 billion pounds mortgage book in half under its in-house rescue plan, in a bid to see off a rival proposal from Sir Richard Branson's Virgin Group, The Daily Telegraph reports.
  • Feb. 7 -- RAB Capital said it has purchased 215,000 shares in Northern Rock at 99.81 pence per shares and now holds 33,469,299 shares, representing 7.94 percent.
  • Feb. 6 -- SRM Global Master Fund said it now holds a 10.77 percent stake in stricken lender Northern Rock, and had 45.34 million shares, after it acquired 2.15 million shares at 92.04 pence apiece.
  • Feb. 4 --Olivant walks away from a bid for Northern Rock, leaving Virgin and the Management team to fight it out. Bid deadline for the bank.
  • Jan. 15 -- Northern Rock holds a shareholder meeting to discuss a private sale of the UK lender or the other alternative of the bank being nationalized.
  • Jan. 14 -- Reports ahead of the EGM suggest that the bank is struggling to make a private sale. Northern Rock shares close at 82.5 pence.
  • Jan. 12 -- The British government invites Ron Sandler, former head of the Lloyd's of London insurance market, to be the stricken lender's executive chairman if it were to be nationalized.
  • Jan. 11 -- The UK bank sells a 2.2 billion pound ($4.3 billion) portfolio of mortgages to US bank JP Morgan, a first step in helping to repay loans from the Bank of England. It has borrowed about 26 billion pounds ($51 billion) from the central bank, Reuters reported.
  • Jan. 10 -- Goldman Sachs, the US investment bank advising the UK government on the future of Northern Rock, seeks to widen the range of options open to the government in its bid to rescue the mortgage lender. UK Chancellor of the Exchequer Alistair Darling expresses doubts of a private sale for the financial service.
  • Dec. 14 -- Reuters reports that the private equity group Olivant is still in the race for the mortgage lender.
  • Dec. 15 -- Luqman Arnold makes an offer for Northern Rock after J.C. Flowers pulls its bid.
  • Nov. 26 -- Virgin Group makes merger proposals for its bid for Northern Rock, CNBC speaks to the Virgin Money CEO regarding the proposals. The UK government gives tentative backing to the Virgin-led bid.
  • Nov. 25 -- UK's Sunday Telegraph reports US billionaire Warren Buffet "has emerged as a potential buyer of Northern Rock."
  • Nov. 20 -- US private equity firm Cerberus drops plans to bid for Northern Rock because of the continuing turmoil in the global financial markets, The Times reports.
  • Nov. 19 -- UK's Darling says it would be wrong to dismiss options, but Northern Rock says the bids it has received undervalue the company. Northern Rock owes the Bank of England 25 billion pounds ($50 billion). Northern Rock shareholders call for sale of lender to be halted, the Financial Times reports.
  • Nov. 16 -- Prospective bidders, including Richard Branson's Virgin Group, US private equity firm J.C. Flowers and investment firm Olivant Advisers, are due to submit their final proposals for Northern Rock. None of the three have provided full financial details of their offering ahead of this Friday deadline. CEO Adam Applegarth annouces his resignation.
  • Oct. 31 -- Britain's fifth-largest mortgage lender said it continues to work with a number of companies as part of its strategic review and has developed structures to allow it to seek interest from other parties.
  • Oct. 19 -- Northern Rock's chairman Matt Ridley unexpectedly resigns.
  • Oct. 16 -- The lender's chief executive and chairman testify before the Treasury Select Committee on events leading to it being bailed out by the Bank of England.
  • Oct. 15 -- Shares of the UK bank plummet after Credit Suisse says Virgin Group would double the number of shares in the lender if the bid is successful.
  • Oct. 12 -- Sir Richard Branson, chairman of Virgin, speaks to CNBC about the bid. Virgin announces proposals to buy a controlling stake in Northern Rock.
  • Oct. 10 -- Northern Rock's shares soar on news SRM Global Master Fund has built a 4 percent stake in the company.
  • Oct. 9 -- Northern Rock announces a deal with British financial authorities to extend guarantees for retail deposits that will enable it to explore a possible sale through the beginning of next year. The UK financial watchdog is questioned regarding its failure to head-off the Northern Rock crisis.
  • Oct. 8 -- Renewed reports that Citigroup and two private equity firms have expressed interest in the stricken lender.
  • Oct. 4 -- Report out that Citigroup has offered to provide potential buyers with funding for the acquisition of Northern Rock.
  • Oct. 3 -- Shares in Northern Rock soar on media reports that private equity firm J.C. Flowers has raised some $30 billion in preparation for a possible takeover. Chris Flowers, who runs the fund, reportedly wants to keep the bank as a whole instead of splitting it up, cheering investors. J.C. Flowers is reportedly conducting due diligence on Northern Rock. Rumors that another private equity firm Cerberus is also considering making an offer.
  • Oct. 1 -- Shares in Northern Rock fall sharply on concerns of a heavily discounted sale.
  • Sept. 26 -- The troubled lender's shares climb on confirmation from the company that it is in preliminary discussions with selective parties for a takeover. Bank of England Governor Mervyn King is grilled by the Treasury Select Committee regarding his handling of the Northern Rock crisis.
  • Sept. 19 -- Shares of Northern Rock fall as speculation of a cut-price takeover of 200 pence-per-share by rivals HBOS or Lloyds TSB mount.
  • Sept. 18 -- UK government pledges to guarantee all existing deposits and customer savings at Northern Rock. The news causes concerns about the nationalization of the British bank. Market watchers blame the demise of N. Rock on ratings agencies.
  • Sept. 17 -- UK Treasury Secretary Alistair Darling reassures Northern Rock investors and customers that the company's problems will be resolved after thousands of customers queued outside the bank's branches to withdraw their funds and investors sold off their stock in the group.
  • Sept. 14 -- Northern Rock appeals to the Bank of England for emergency funding. CEO Adam Applegarth says it requires a "substantial amount" from the central bank.
  • Sept. 13 -- Northern Rock is the worst performer on the FTSE-100 index after UK house prices fell for the first time in nearly two years.
  • July 25 -- Northern Rock CEO warns its full-year outlook will be affected by higher borrowing costs.
  • June 27 -- Shares of Northern Rock fall after the mortgage lender cuts its 2007 profit forecasts, blaming a rise in funding costs. Northern Rock Shares stood slightly below 1,200 pence.