December 07, 2007

By Reuters
Copyright Reuters

The British Prime Minister has promised that public funds will be protected in any agreement reached over the Northern Rock building society.

Speaking to Members of Parliament during Prime Minister's Questions, Mr Brown said he believed the British people thought it right that action be taken and the struggling financial group be rescued. He said that any settlement on the future of Northern Rock would "insist" on the protection of public funds.

The Prime Minister added that "all options are on the table" but that finding a private buyer was the "preferred option".

Northern Rock, a leading mortgage lender, foundered in September due to the global credit crunch - the sudden slowdown in income caused by debtors, particularly high-risk mortgage borrowers in the United States "subprime" market, defaulting on their repayments.

The Bank of England provided emergency funding before the Government pledged to guarantee savers' deposits on 17 September. A number of businesses, including Richard Branson's Virgin Money group, have been in negotiations over a potential buy-out.