Northern Rock collapse 'could have been avoided'

14 June 2012

The collapse of Northern Rock could have been avoided had the UK government taken a different course of action.

That is the opinion of Hector Sants, the outgoing chief executive of the Financial Services Authority (FSA), who believes there was another way of dealing with the British bank's impending disintegration at the outset of the global downturn.

During an interview with the BBC's business editor Robert Peston, Mr Sants revealed that he recommended the Bank of England grant a loan to Lloyds TSB so the major financier could take over Northern Rock.

The bank was instead nationalised later in 2008, but the FSA official - who will leave his post at the end of this month - insisted that "things would have been very different" had his recommendation been listened to.

"It would have changed the general climate in relation to the old building society sector that had moved into the banking sector," he added.

By Asim Shah

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