NORTHERN ROCK: CHANCELLOR SHOULD LOOK TO ECB FUNDING, Says Fiona Hall MEP

Fiona Hall has written to the Chancellor asking whether he is going to make use of European Central Bank funding to help Northern Rock.

In the wake of a dramatic slump in the share price of the beleaguered Newcastle-based Bank, Fiona Hall has asked why the avenue of funding through the European Central Bank was not explored many months ago and whether it is being considered now.

The European Central Bank makes loan facilities available to any bank with branches within the Eurozone. This would apply to Northern Rock as it has a branch in Dublin.

Commenting on the letter sent to Alistair Darling, Fiona Hall said:

"I have written to the Chancellor to ask whether he is looking into loan options for the Northern Rock through the European Central Bank.

"It is possible that an application to the ECB's €240 billion reserve could have been made at any early stage. If this is the case then an ECB loan to Northern Rock could have been made without upsetting the stock market and thus avoiding the run on the bank that ensued.

"In any case, I would like to know if the Chancellor is considering an ECB loan now. I've asked him to confirm that any loan from the ECB would be at a much lower rate of interest than the punitive 7% currently being charged.

"A loan from the ECB would also avoid any question of the UK Government falling foul of EU state aid rules which do not allow governments to prop up or unfairly advantage private firms.

"I believe a loan from the ECB could ease the burden currently being shouldered by UK taxpayers and at the same time help secure thousands of jobs plus the wider economic benefits that Northern Rock has brought to the North East."