NATIONALISED lender Northern Rock revealed yesterday that no legal action would be taken against former directors at the centre of the group's collapse last year.
Management said a review by lawyers and accountants into the previous regime, headed by chief executive Adam Applegarth, had found "insufficient grounds to proceed with any legal action for negligence".
Before running into funding problems last s
ummer, Northern Rock was one of the UK's biggest and most aggressive mortgage providers, advancing loans worth as much as 125 per cent of home values.
It was forced to turn to the Bank of England for emergency support after the money markets froze, leaving the group facing a funding crisis.
Northern Rock's nationalisation in February led to 1,500 job losses as it scaled back activity to pay back the government.
The group's mortgage arrears figure jumped by nearly 60 per cent during the last three months, reflecting the fact that it has been left with poorer quality loans.
The percentage of its estimated 600,000 mortgage accounts more than three months in arrears was 1.87 per cent at 30 September, up from 1.18 per cent at the end of June. Northern Rock also saw the number of properties in its possession jump 491 during the period to 4,201.
Chairman Ron Sandler has warned that the bank, which racked up a near £600 million first-half loss to 30 June, would be "significantly" loss-making this year.
In its third-quarter update yesterday, Northern Rock said that a review of the conduct of the previous board "in respect of funding and liquidity" had been carried out with the help of lawyers Freshfields and accountants KPMG Forensic.
It added: "The board has concluded that there are insufficient grounds to proceed with any legal action for negligence against the former directors, and has no intention of bringing any such action. The board has also completed a similar review in respect of the company's auditors and has determined that no action is warranted."
Applegarth stood down as chief executive last December, securing a £760,000 pay-off.
FACT BOXNORTHERN Rocksaid yesterday that it had repaid more than half of a loan from taxpayers to keep it afloat, putting it ahead of schedule.
Government-appointed chairman Ron Sandler said that as of 30 September, Northern Rock had paid back £15.4 billion of the loan granted earlier this year, leaving an outstanding amount of £11.5bn.
The net figure excludes the bank's liquidity deposits held with the Bank of England, which were £7.1bn at 30 September.
That leaves the bank ahead of its target to repay the loan by the end of 2010. The mortgage lender plans eventually to return to the private sector.
The full article contains 463 words and appears in The Scotsman newspaper.
