The former FD of Northern Rock, Bob Bennett, has said the now-nationalised lender would never have gone to the Bank of England for emergency funding if he was still in charge of the finances.

In an interview with Five Live, Bennett also defended the bank’s strategy of raising money on the wholesale financial markets. But he criticised ex-Northern Rock CEO Adam Applegarth's running of the business last year.

“Nobody could have predicted the demise of the US sub-prime market and the credit crunch. However, to increase lending by 50 per cent in 2007 in a market where debt was increasing, interest rates were rising I think was probably bordering on reckless,” Bennett said, adding that he warned Applegarth about the bank's perilous situation.

Bennett was FD of Northern Rock for 13 years before he retired in 2006. He is currently a non-executive director of Greggs the baker but became involved in Northern Rock again late last year as part of JC Flowers' bid for the bank. Bennett was appointed as an adviser to the private equity firm's proposed management team. JC Flowers, however, pulled out of the race for the Rock in December.

Bennett said Northern Rock’s strategy was successful for 16 years and had been subject to “a very exhaustive risk management process which looked at the turning off of all the funding streams – retail, wholesale and securitisation”.

But he said the bank’s lending “ought to have been more muted” in 2007 when economic conditions deteriorated. Had this happened, Bennett said Northern Rock wouldn’t have had to go to the Bank of England to borrow emergency funds. He also said this “would not have happened if I’d been there because it’s tantamount to advertising the company was going into insolvency”.

Bennett added: “I don’t blame Adam Applegarth entirely because the economic conditions in terms of the credit crunch weren’t his responsibility. But I never believed the management team should back itself into a corner where it has to go to the lender of last resort. Other banks – HBOS, Lloyds etc – have managed the crisis without having to do that.”

As for the future of Northern Rock, Bennett said it's now “very, very difficult”.

To listen to the interview, click here. It starts approximately 1 hour and 49 minutes into the programme.

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Related tags: northern rock, northern rock fd, nationalised lender, nationalisation, credit crunch, economic conditions, jc flowers, adam applegarth, wholesale financial markets, sub prime market, lender of last resort, private equity firm, bob bennett, emergency funding, emergency funds, bank of england, hbos, finance director, insolvency, lloyds, risk management,