The Government's investments will be managed on a commercial basis by a new arm's-length company, 'UK Financial Investments Limited' (UKFI), which is wholly owned by the Government.
Its overarching objectives will be to protect and create value for the taxpayer as shareholder, with due regard to financial stability and acting in a way that promotes competition.
UKFI will work to ensure management incentives for banks in which it has shareholdings are based on maximising long-term value and restricting the potential for rewarding failure. It will also oversee the conditions of the recapitalisation fund, including maintaining, over the next three years, the availability and active marketing of competitively-priced lending to home owners and small businesses at 2007 levels.
Membership of the UKFI Board will comprise a private sector Chair, three non-executive private sector members, a Chief Executive and two senior Government officials from HM Treasury and the ShareholderExecutive. Sir Philip Hampton has agreed to become the UKFI's firstChair and John Kingman will become Chief Executive. Both will take up these positions shortly. The remaining private sector board memberswill be recruited expeditiously. These roles will be filled by individuals of relevant commercial skill and experience to enable UKFI to best meet the objectives set out above.
In due course, the Government intends that UKFI will manage its investments in Northern Rock plc and part of Bradford & Bingley.
These companies will continue to have their own independent Boards and management teams, determining their own strategies.
In addition to the recapitalisation fund and the credit guarantee scheme, the Government will continue work to ensure that all lenders do everything they can to support homeowners and small business during this period of financial market turbulence.
