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Last Updated: Monday, 19 November 2007, 19:24 GMT
Darling in Commons row over Rock
People walking past a branch of Northern Rock bank
More bids for Northern Rock are expected soon
Chancellor Alistair Darling has clashed with the shadow chancellor over his role in the Northern Rock crisis, as bids to buy the bank came in.

Mr Darling told MPs the government had a clear duty to protect the public interest, "and we will do that".

But his shadow George Osborne said the chancellor had not explained how taxpayers would get their money back.

Northern Rock says bids received so far from potential investors are "materially below" its share price.

Two suitors, Virgin Group and Olivant Advisers, have both submitted their proposals to rescue the firm.

But news of their value sent Northern Rock shares plunging and they ended the day 21.4% lower by close of trade.

More bids expected

BBC business editor Robert Peston
Northern Rock's shareholders have had a huge dose of bad news
Robert Peston
BBC Business Editor

The Newcastle-based company, which employs about 6,000 staff, said that it expected to receive further expressions of interest over the "next few days".

As well as Virgin and Olivant - an investment firm headed by former Abbey boss Luqman Arnold - private equity firms JC Flowers and Cerberus have eyed the Rock.

The bank, whose chief executive Adam Applegarth resigned on Friday, said that while it would still analyse and discuss proposals it had received, "the value to shareholders from any of the proposals remains highly uncertain".

'Money will be repaid'

Mr Darling was defending his role in the crisis that has engulfed the mortgage lender since September, when the government was forced to put up huge loans to save the bank after thousands of customers queued up to withdraw their funds.

But shadow chancellor George Osborne said the fallout from the crisis "got worse each week".

Speaking in the House of Commons, Mr Darling insisted that the government-backed loans given to the bank - currently worth about 24bn - must be repaid - and said that the lending was all guaranteed against "quality assets" including mortgages.

HAVE YOUR SAY
Northern Rock should be nationalised immediately to protect our money
David Rose, London, UK

Talking about the potential sale of the Rock, he said that the government would "only support a proposal that protects the interest of the depositors and the tax-payers".

"It is in the interests of everyone that the situation with regard to Northern Rock is resolved as soon as possible," he added.

"It would be quite wrong to dismiss any option now without proper consideration as some suggest.

"I continue to believe it is right to use this time to explore the best outcome for the company and the public interest."

Savings are "fully guaranteed"

He added that deposits of savers would continue to be fully guaranteed - and that if the situation was set to change - plenty of notice would be given.

Earlier the government said that there was no certainty that any bidder for the Rock would have access to the emergency loans after February.

But the Treasury said that it was "willing to discuss" any proposals that envisaged a continuing role for the Bank of England, the Treasury and the Financial Services Authority.

The Treasury has also warned that the support it has provided to the Rock could represent state aid under EU rules and therefore may be illegal if continued for an indefinite period.

In its statement, the Treasury says that costs and risks associated with Northern Rock should be "borne to the greatest extent possible" by the current and future providers of capital, an indication that it is worried that taxpayers could lose money as a result of the woes at the bank.

The Liberal Democrats have renewed their call for the bank to be nationalised, stabilised and then sold off, because they say the directors and shareholders have no interest in safeguarding taxpayers' money.

The Tories are also demanding assurances that taxpayers' money is being safeguarded.



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Heated exchanges in the House of Commons



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