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Dead Constitution See other Dead Constitution Articles Title: Northern Rock chief and seven directors quit Northern Rock chief executive Adam Applegarth and seven other directors have stepped down from the board on a day of high drama that saw the crippled bank receive at least two bid proposals. Chairman Bryan Sanderson cleared out almost the entire board and replaced them with two renowned troubleshooters – John Devaney, chairman of Telent, and Simon Laffin, formerly Safeway's finance director. They join as non-executive directors. Mr Sanderson added that a third will be appointed shortly. Mr Applegarth tendered his resignation but will continue as chief executive until the end of January to see through "the second phase of the strategic review", after which he will step down. By resigning, he appears to have forgone a possible £1.4m pay-off, though the terms of his departure are still being negotiated. Mr Sanderson said: "I don't think a big pay-off would be appropriate." Mr Applegarth has amassed a £266,000 pension in his 24 years at the bank. The departures came almost exactly two months after Northern Rock revealed it had been forced to go to the Bank of England for emergency funding, leading to the first run on a British bank in 140 years. It has drawn down an estimated £25bn so far. Including various Treasury guarantees, the taxpayer is carrying an estimated £40bn-£50bn exposure. Northern Rock received a muted response to its nominal deadline for proposals yesterday amid mounting frustration among bidders with the auction process. Several have said it has been difficult to deal with the company as the Treasury is really taking the key decisions behind the scenes. The only two to declare their hands were Sir Richard Branson's Virgin Money and a consortium led by former Abbey boss, Luqman Arnold – neither of whom indicated an offer price. JC Flowers, the private equity firm widely considered a front runner, has yet to submit its documents. Virgin has lined up Sir Brian Pitman, the 75-year-old former chairman of Lloyds TSB, to take over as chairman and stated that "a significant proportion of the Bank of England borrowings will be repaid immediately". It is believed to have secured £5bn of funding but will still need one to two years to pay off the entire amount. Mr Arnold's Olivant group pledged "prompt repayment of the liquidity support facility" but failed to provide any detail. JC Flowers, which has lined up £15bn of funding, is expected to continue to work on its proposal over the weekend before submitting it early next week. Sources said US hedge fund Cerberus was cooling on the prospect of making a proposal for Northern Rock, especially as its bidding partner, GMAC, has run into trouble over sub-prime mortgages in America. Boston-based private equity firm Thomas H Lee is also believed to be considering a break-up offer. Mr Sanderson said late bids will be accepted. Northern Rock is expected to make an announcement in the next few days. There are concerns that the offers will be pitched beneath the current share price, which closed down 2.1 at 132.6p – a shade above its record low. One source said the bank will have to inform the market if none of the bids offers shareholders a premium. The Government has given the bank until February 17 to find a solution, but has been pushing it to move faster. Mr Sanderson said: "The streamlining of the board is intended to assist a smooth and rapid decision making process." One insider conceded that the clear-out was necessary both "publicly and politically" because the "people who had anything to do with the collapse needed to be removed". Among the non-executives who retired with immediate effect was Sir Derek Wanless, the former chief executive of NatWest who was responsible for stress testing Northern Rock's business model. He was singled out for criticism by MPs at the Treasury Select Committee for failing to identify the inherent risk in the bank's structure. Nichola Pease, a scion of the Barclays Bank dynasty, Adam Fenwick and Rosemary Radcliffe also stepped down from the non-executive board. Deputy chief executive David Baker, treasury director Keith Currie and commercial director Andy Kuipers have relinquished their executive powers but remain with the company. Of the original Northern Rock team, only finance director Dave Jones, senior independent director Sir Ian Gibson and non executive Michael Queen will remain. Sir Ian, also chairman of media group Trinity Mirror, and Mr Queen, of private equity group 3i, have been spearheading the sale process for the board.
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#1. To: DeaconBenjamin (#0)
...indicted, convicted and imprisoned.
No golden parachute. Britain is far more moral than the US in that regard.
The U.S. Constitution is no impediment to our form of government.--PJ O'Rourke
I find it very difficult to believe that this was some kind of administrative error. These guys made out bigtime, else where's the incentive? John Lennon - Working Class Hero Lyrics As soon as you’re born they make you feel small,
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