THE RUN on Northern Rock which brought the bank to its knees and sparked the financial crisis could have been avoided, says the man spearheading the campaign to win a fair deal for shareholders.
Dennis Grainger, pictured, is the local face of the UK Shareholders’ Association (UKSA) challenge to the Government’s system for calculating how much compensation former shareholders should receive for their stake in the bank.
He was speaking after the outgoing head of the Government’s financial watchdog said the bank’s collapse could have been avoided.
Financial Services Authority (FSA) chief executive Hector Sants said he had urged former Chancellor Alistair Darling to give Lloyds backing in its bid to take over Northern Rock, but the Labour man rejected the plan on the advice of Bank of England governor Sir Mervyn King.
Mr Sants said: “I think things would have been different if the Government and Bank had taken my recommendation that they should provide liquidity support to Lloyds to purchase Northern Rock.
“I think that would have made a difference.
“It would have avoided the queues and it would have changed the general climate in relation to the old building society sector that had moved into the banking sector.
“At that early stage, if we had avoided the Northern Rock problem, which we could have done through that action, then I think the tone and people’s view of the UK banking sector would have been different.”
More than 2,000 people have lost their jobs since the bank was nationalised in February 2008.
Mr Grainger said he believed the Government had failed badly in its handling of the crisis.
“I think the Bank of England did let us down and the Government should have stepped in to make sure the money was available for Lloyds to take over Northern Rock,” he said.
“If that had been done, there would not have been a run on the bank and I think a lot of jobs could have been saved and a lot of people could have been spared heartache.
“It is a great shame that was not done at the time.”