Britain could take a decision to nationalise ailing mortgage bank Northern Rock within days and has lined up respected executive Ron Sandler to run the bank if the state takes control, the BBC said on Saturday.
Amid growing speculation that Northern Rock will be nationalised, the BBC cited bankers close to the situation as saying the finance ministry has a fully developed plan to own and manage the bank should a commercial solution fail.
Sandler would be appointed executive chairman. He was the former boss of the Lloyd's of London insurance market and worked with the government developing stakeholder pensions and other retirement investment products.
A Treasury spokesman declined to comment on the reported hiring of Sandler and said finance minister Alistair Darling last week made it clear that a private sector solution was preferred, but he would be exploring all options.
Northern Rock said it still favoured a private sector solution and a decision to nationalise was a matter for the finance ministry. Earlier on Saturday the Daily Telegraph reported the government had almost ruled out a commercial rescue after conceding that funding for a deal cannot be found.
Goldman Sachs, which is advising the government and trying to arrange financing, has thrown in the towel, leaving the government to find another solution, the paper said.
Investment firms Virgin and Olivant have been in talks about a possible deal for Northern Rock for several weeks, but are facing difficulty raising the billions of pounds needed to pay back to the Bank of England. Northern Rock has borrowed about 26 billion pounds from the central bank.
Shareholders, who are due to hold a key meeting in the bank's home town of Newcastle on Tuesday, could receive nothing if the bank is nationalised. Goldman Sachs, which is advising the government, has been expected to provide details of its funding and strategic proposals by the shareholder meeting, people familiar with the matter have said.
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