ONS puts Rock on balance sheet
Move to put stricken bank on the government's balance sheet, threatening government rules on debt.
The Office of National Statistics has classified Northern Rock as a ‘public
financial corporation’, bringing its £90bn debt onto the UK’s balance sheet.
The move will be humiliating for the government, threatening as it does to
breach government rules on indebtedness.
The reclassification is backdated to October 9, when the Bank of England made
all of the stricken bank’s assets its collateral for its lending.
The ONS said: ‘The decision is in line with international statistical
guidance. It should not be confused with “nationalization”, which is a term
commonly used to refer to public ownership.’
Since the Bank of England is required for the bank to make major decision, it
must be on the public balance sheet, the ONS said.