The Newcastle-based bank confirmed this morning it was working with law firm Freshfields to determine whether there is a case against the bank’s previous directors.
Former chief executive Adam Applegarth was fiercely critisised for his role in the demise of Northern Rock last September. He left the firm with a £63,000 a month redundancy package.
A Northern Rock spokesperson says: “The board remains focused on taking Northern Rock forward but clearly it has a duty to consider other factors such as the conduct of previous directors. However, no conclusions have been reached in this respect. This is an ongoing investigation and as and when the investigation produces its results, we will know more about whether or not there is the basis of any action.”
Liberal Democrat Shadow Chancellor Vince Cable says the investigation, while belated, is very welcome.
He says: “We’ve long argued that the previous board must be held to account, particularly former chief executive Adam Applegarth. It’s ridiculous that Mr Applegarth has been able to spend the last six months whiling away the hours on his £63,000 a month redundancy package, without any investigation into how he got Northern Rock into this mess. It is essential this investigation is also extended to Northern Rock’s auditors, who must be held to account for their gross oversights. Northern Rock chairman Ron Sandler must ensure no one from the previous administration is allowed to duck the responsibility they hold for the run on Northern Rock.”