Lessons 'to be learned' over bank

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Bosses at the Financial Services Authority (FSA) admitted "lessons had to be learned" after the run on the bank last month.

They told MPs on the Treasury Select Committee that Northern Rock had not been due a full risk assessment until three years after its last one, conducted between December 2005 and February 2006.

Committee has disclosed it will be hauling Northern Rock chiefs before it next Tuesday.

The bank's chairman, Matt Ridley, and chief executive Adam Applegarth will be grilled as part of the committee's ongoing inquiry into financial stability and transparency.

While specific issues were addressed with the bank on a more regular basis, chief executive Hector Sants said the FSA was reviewing its procedures in response to the fiasco.

"There are lessons to be learned here, with regard to our supervisory capacity, and I do think we need to look back over our engagement with this particular company," he told the committee.

Mr Sants went on to say that the FSA had predicted Northern Rock - before it ran into credit problems requiring financial support from the Bank of England - to have a "low" probability of getting into trouble.

"In terms of its probability of getting into difficulty, we had it as a low probability, and there's no question of course - the way that events transpired - that that probability analysis was proved to be inaccurate. So we have some serious lessons to be learned," he said.

Mr Sants and FSA chairman Sir Callum McCarthy stressed, however, that they were not alone in failing to predict the bank's difficulties.