Northern Rock: No chance of “business as usual” for nationalised bank as Darling faces EU intervention

Labour threatened with EU veto of Northern Rock plan

Strasbourg February 19th — A leading Conservative has said that it is ‘inconceivable’ that the European Commission will allow Northern Rock to continue to operate after nationalisation on a ‘Business as Usual’ basis, as claimed yesterday by Chancellor Alistair Darling.

Sir Robert Atkins MEP, said:

“Labour’s Northern Rock nationalisation could soon fall foul of the EU’s state aid rules - jeopardising the Chancellor’s ‘business as usual’ claim. The Chancellor’s statement is completely incompatible with the operation of a free, fair market in mortgage banking. Labour must get state aid clearance by March 17th but Commissioner Neelie Kroes stands in their way.

“The European Commission has a clear responsibility to other mortgage banks to maintain fair competition. Northern Rock is currently able to offer market leading interest rates to investors guaranteed by the British taxpayer, which is a clear distortion of the mortgage banking market.”

Sir Robert added: “Northern Rock will be an early test of Commissioner Kroes’s determination. State Aid should be short term, and based upon a fundamental restructuring of the business, which does not distort competition.”

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