The directors of Northern Rock were the principal authors of the difficulties that the company has faced since August 2007. The high risk, reckless business strategy of Northern Rock, with its reliance on short and medium term wholesale funding and an absence of sufficient insurance and a failure to arrange standby facility or cover that risk, meant that it was unable to cope with the liquidity pressures placed upon it by the freezing of international capital markets in August 2007.
It was unfortunate that the shareholders who acquired their shares as part of demutualization and the staff of Northern Rock have suffered significantly from the fall in the value of Northern Rock shares. However, it is not possible to make a distinction between types of shareholders in the circumstances of Northern Rock. In a market environment, shareholders as a whole must be viewed as taking a risk from which they sought a reward and for which they are now paying a price.