Northern Rock could have avoided the crisis which triggered the first run on a major British bank in more than 140 years, if it had access to the same funding as US and European rivals, its chief executive told the treasury committee yesterday.
‘The fundamental cause (for the crisis) was the speed and duration and the global nature of the liquidity freeze, heightened for us by the fact we didn't have access to the same type of borrowing facilities available to banks in the US and from the ECB (European Central Bank),’ Adam Applegarth, Northern Rock chief executive, told the treasury committee.
Applegarth - the architect of Northern Rock’s funding strategy to rely on wholesale markets for three quarters of its funding - Matt Ridley, chairman, and two other directors denied accusations they had been too aggressive with lending to homeowners, ignored warnings about problems in financial markets and pursued a risky funding model.
Asked whether the bank was in denial and denying its responsibilities, Ian Gibson, senior non-executive director, said: ‘There is absolutely no arrogance. There is shock and there is distress.’
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