Northern Rock directors and auditors escape legal action

Northern Rock directors and auditors escape legal action

The bank, which was nationalised in February, said earlier this year it was looking into whether there were legal grounds to sue Mr Applegarth and others for negligence.

The Newcastle-based lender said today it has also decided “no action is warranted” against the auditors.

The chancellor, Alistair Darling, revealed last week Northern Rock had repaid more than half of the Government’s £27bn loan. The bank said today the net balance outstanding is £11.5bn.

Northern Rock’s chief executive, Ron Sandler, said the repayment was due to the bank’s aggressive mortgage redemptions, where it helps customers to access new products with alternative lenders.

Mr Sandler added that the redemption programme would continue. But he added: “The company anticipates it will be more challenging in the future to maintain 2008 redemption levels given the significant slowdown in the housing market and reduced availability of alternative mortgage financing.”

At the same time as shrinking its mortgages, Northern Rock is trying to snap up deposits. The bank had to withdraw some of its savings products two weeks ago when savers rushed to put their money into the Government-owned institution at a time of severe turmoil elsewhere in the market.

Northern Rock agreed a “regulatory framework” in return for the Government’s support. One condition is that it is not allowed to compete unfairly with rivals and must keep its share of the UK savings market at less than 1.5pc.

Northern Rock said it would “continue to monitor the situation and will take action as necessary to ensure that it remains compliant with the framework. No breach of the framework has occurred since its introduction at the end of March.”

Northern Rock said it continued to attract new retail deposits in the third quarter. Total retail funding rose to £17.2bn at the end of September, a £3bn increase from the end of June. Retail deposits represent £15.5bn of that sum.

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