England's Northern Rock said Friday it is replacing its chairman, after two months of troubles during which the mortgage lender took emergency funding from the Bank of England and saw the first run on a British bank in nearly a century.
Chairman Matt Ridley, who has carried much of the blame for Northern Rock's troubles, is to resign and be succeeded by former Standard Chartered Chairman Bryan Sanderson, the bank said in a statement to the London Stock Exchange.
Northern Rock said Ridley "made clear in September that he was willing to resign," but was asked to stay on until new funding arrangements were in place and until he had given evidence to the Parliamentary Treasury Select Committee.
Ridley told the Parliamentary inquiry earlier this week that nobody could have predicted the complete market shutdown that led to Northern Rock's problems.
"He and the board now believe that in the interests of all stakeholders in the company, the time is right to accept his resignation as a director and chairman of the company," Northern Rock said.
The appointment of Sanderson, who is also a former chairman of BUPA and a former director of BP, will take effect immediately after the company obtains the necessary approval from the Financial Services Authority.
Northern Rock has been consulting with the Bank of England, the Financial Services Authority and the British government on executive decisions since it ran into trouble.
Ridley and CEO Adam Applegarth told lawmakers earlier this week that the bank, which is now in talks with several potential suitors, had picked up some warning signs but could not have predicted the full extent of the problems or done anything to mitigate the risk.
Ridley said he started discussing potential problems for the lender with Applegarth on Aug. 10, the day after the credit markets first froze and discussions were ramped up as it became clear the freeze was not clearing.
Ridley said the bank had sought to diversify its sources of funding but also insisted that it could not have predicted the worldwide closing of credit markets.
Northern Rock was particularly exposed the shrinking of global credit markets after the collapse of the U.S. subprime mortgage market because of its heavy reliance on funding from the wholesale money markets.
Those markets dried up in early August as banks became increasingly reluctant to lend to each other while they remained unaware of rivals' exposure to the U.S. subprime collapse.
Northern Rock went public with its problems last month, issuing a profit warning as it confirmed that it had approached the Bank of England as the lender of last resort for funds to help it through the crisis.