Northern Rock board members were ordered out of their beds by the Bank of England as they slept through last-ditch efforts to prop up the stricken lender, it was revealed yesterday.
Speaking on the tenth anniversary of the run on the Newcastle bank, top City regulator Andrew Bailey revealed how the lender’s top brass had to be woken up to agree an emergency bailout.
He also recalled how Northern Rock lawyers tried to haggle over the terms of the rescue package – before being slapped down by Bank of England legal adviser Dame Juliet Wheldon. ‘On the night we put the loan in place, Northern Rock lawyers turned up with a pro forma set of documents and said, “Here’s our standard terms,”’ said Bailey, who was a deputy governor at the Bank of England at the time.
Hard rock: Northern Rock lawyers tried to haggle over the terms of the rescue package – before being slapped down
‘Juliet said: “You do realise that you’re dealing with the Bank of England. We don’t take other people’s terms – this is not a haggle.”’
Bailey, now chief executive of the Financial Conduct Authority, went on: ‘This must have been about two or three o’clock in the morning. They said: “Well, we need to get the Northern Rock board to approve the loan. Our board’s all in their beds.”
‘I’m afraid I did lose it a bit at that point. I said: “You’re going to get a director out of bed. We’re not hanging around waiting for your directors. You do realise your company’s standing on a cliff edge.”’
The Bank of England agreed to bail out Northern Rock in September 2007 as it teetered on the brink of collapse.
News of the rescue broke on the BBC on the night of September 13, and the following day Britain suffered its first bank run for more than a century as worried savers queued for hours to withdraw their cash.