The use of inadequate IT systems at Northern Rock was a reason the government decided not to let the bank go out...
of business, it has emerged.
Northern Rock was forced to take an emergency loan from Bank of England to prevent it breaching solvency rules in September 2007when it was one of the first casualties of the sub-prime mortgage crisis.
According to a National Audit Office report, the government did not allow the company to wind up because it feared that customers would have suffered.It instead nationalised the firm.
According to the report, "The option of winding down the business was considered, but inadequate IT systems at Northern Rock meant that depositors would have had to wait for their money, risking another major run and potential hardship for those reliant on access to their funds."
The report said that using Northern Rock's computer systems it would have taken 10 to 12 weeks to repay depositors with a likely error rate of 25%.
Northern Rock also had problems with its website following the trouble. Customers were unable to get reassurance from the company's website during the crisis.