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N Rock nationalisation still on

06/01/2008

The nationalisation of troubled lender Northern Rock is still being considered by the government, Gordon Brown has admitted.

But the prime minister said the "preferable option" is that a private sector bid is successful and insisted that each offer is being "looked at very carefully".

Northern Rock's deteriorating financial situation in September last year led to the first run on a British bank in a century and prompted the government to guarantee the savings of its customers.

The Newcastle-based lender, Britain's fifth-biggest, is currently the focus of a number of prospective bids but three months on there is still no deal on the table.

And that has led to mounting speculation that the Treasury will be forced to take the bank under state control, something Mr Brown would not rule out today.

Speaking on the BBC's The Andrew Marr Show, the prime minister said that the government is still considering all potential avenues.

"We appointed [accountants] Goldman Sachs to advise us on this. They will report very soon," he said when questioned on the issue.

"And of course our aim in this has been both to protect the depositors of Northern Rock and the mortgage holders of course and they have been protected, the depositors."

He added: "As far as the taxpayers are concerned we have secured our guarantees against the assets of Northern Rock."

Mr Brown's comments come as chancellor Alistair Darling announced plans to give financial regulators new powers to restructure failing banks.