Northern Rock Foundation may be back on solid ground

Northern Rock Foundation may be back on solid ground

News

The government’s decision to nationalise Northern Rock bank has seen a commitment to guarantee a minimum income of £15m a year to the Northern Rock Foundation (NRF) for the next three years.

In outlining his plans for the bank the Chancellor, Alistair Darling, has pledged that the Foundation’s income would be set at the £15m minimum for the next three years, and would be paid directly by Northern Rock. The new board of the bank will also be asked to identify a viable long-term future for the Foundation.

The Northern Rock Foundation is run independently of the bank and has been supported by an annual donation of 5% of the plc’s pre-tax profits.

The Foundation owns 15% of the shares of the bank, but the value of the shares is now estimated to be nil.

In December the Foundation set a cautious grant-making budget of £7m for this year, around one-third of its 2007 budget, and said that it would close four of its seven grant programmes to accommodate the cut.

NRF trustees are now considering the most effective way to use the funds, and will make announcements about this in May.