November 14, 2007 / 1:11 PM / in 12 years

King did not consider resigning over Northern Rock

LONDON (Reuters) - Bank of England Governor Mervyn King said on Wednesday he has not considered resigning over the funding crisis that sparked the first British bank run in more than a century.

King has come under fire for not acting quickly enough to inject cash into the money market when lending seized up during a global credit crunch that took hold in August. Funding problems at mortgage lender Northern Rock forced it to seek emergency finance from the Bank.

King’s term ends in June 2008 and speculation is mounting about whether he will be invited to serve a second term, especially after the government said it would not take a decision until next year.

Asked at a news conference on the Bank’s quarterly Inflation Report whether he ever considered resigning, King replied: “No.”

He repeatedly said this was a matter to be decided in the new year, saying there were more important things to be worried about at the moment.

King has previously said he would have expected a decision on his re-appointment by the end of this year.

Some critics have blamed King for halting a takeover of Northern Rock by Lloyds TSB before the mortgage lender turned to it for help. News of the emergency funding triggered a run on deposits that only stopped after the government pledged to guarantee peoples’ savings.

King has defended his decision not to follow other central banks and pump cash into money markets to help bring down interbank lending rates but has acknowledged there were lessons to be learnt from the events over August and September.

“We would have done many things differently,” he said in an interview with the BBC last week, adding the Bank should have pressed harder for new legislation and communicated earlier in August about problems stemming from market turmoil.

On Wednesday, King refused to take any specific questions on Northern Rock but said Britain’s banking system remained well-capitalised.

Reporting by Fiona Shaikh; Editing by Ruth Pitchford

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