Strategic Review Update

RNS Number:1869O
Northern Rock PLC
18 February 2008


                                18 FEBRUARY 2008

                            STRATEGIC REVIEW UPDATE


Northern Rock taken into temporary public ownership


The Board of Northern Rock notes the Government's announcement of its intention
to take the Company into temporary public ownership by legislation under which
it will acquire all of the shares in the Company, including the preference
shares. The Government expects temporary public ownership to become effective
within the next few days.


It has been important to have had the time to ensure there were a number of
private sector solutions available. The Board hoped that at least one of those
options would succeed and is very disappointed that the Government concluded
that it was unable to provide funding to support a private sector solution and,
in particular, the proposal put forward by the Company, which the Board believed
satisfied the interests of all stakeholders.


The Company has been informed that the listing of its ordinary and preference
shares has been suspended with immediate effect by the UK Listing Authority and
that trading of these shares on the London Stock Exchange has ceased. The
Government has said that it will be providing details shortly of the independent
valuation process that will be established to assess compensation due to
shareholders. The Company understands that the listing and trading of the debt
instruments of the Company and its financing vehicles remain unaffected


The Government has also announced that it intends to appoint Ron Sandler as the
new Executive Chairman of the Company and Ann Godbehere as the new Chief
Financial Officer to work with the existing management team to determine the
appropriate business strategy for the Company whilst in temporary public
ownership. It is not possible at this stage to give any guidance on the nature
of such changes or on the impact of any changes, which may be made to the
business, on employees of the Company.


The Government's announcement makes clear that the Company and its new
management will be expected to operate at arm's length from the Government with
commercial autonomy for its decisions and with the aim of returning the Company
to the private sector at the earliest opportunity.


The Government has indicated that the new management of the Company will be
asked to identify a viable long-term future for The Northern Rock Foundation
and, in the meantime, that the proposals being developed by Mr Sandler envisage
the Company paying to the Foundation a minimum of �15 million per year in each
of 2008, 2009 and 2010.


The Government has confirmed that the Company will remain fully open for
business, working normal hours and operating as usual and that customers will
not be affected by this development. It has also confirmed that HM Treasury's
guarantee arrangements remain in place and depositors' money continues to be
safe and secure. All branches, call centres, and other operations remain open
for business to ensure the Company continues to provide a high standard of
service to its customers.



City Contacts                      Press Contacts

Richard Moorin                     Brian Giles
Investor Relations                 Communications Director
0191 279 4093                      0191 279 4676

Simon Hall                         John C Watson
Investor Relations                 Corporate Communications
0191 279 6090                      0191 279 5295

                                   Ron Stout
                                   Corporate Communications
                                   0191 279 4921

                                   James Murgatroyd
                                   Finsbury Limited
                                   020 7251 3801



The Blackstone Group International Limited ("Blackstone"), Citigroup Global
Markets Limited ("Citi") and Merrill Lynch International, which are authorised
and regulated in the United Kingdom by the Financial Services Authority, are
acting exclusively for Northern Rock plc and no-one else in connection with the
matters referred to in this announcement and will not be responsible to anyone
other than Northern Rock plc for providing the protections afforded to clients
of Blackstone, Citi or Merrill Lynch International nor for providing advice in
relation to the matters referred to in this announcement.





                      This information is provided by RNS
            The company news service from the London Stock Exchange

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