Anger as Northern Rock plans dividend

Goldman Sachs was brought in after the Treasury guaranteed Northern Rock's debts alongside savers' deposits eight days ago. It will advise on implications for taxpayers of any rescue plan, while considering alternative scenarios and working through the detail of the guarantee.

For the time being, Goldman will take a back seat, leaving the rescue plan to Merrill Lynch, which is advising Northern Rock's board. Merrill Lynch is seeking a buyer, but banks appear to have balked at the lender's potential £20bn funding liability. The shares fell a further 22 to 172p yesterday as bankers said a white knight was unlikely to emerge.

Northern Rock's growing troubles have led to resentment that shareholders will profit from the taxpayers' guarantee. The bank plans to pay a £59m dividend next month to everyone on the share register this week, despite having drawn £2.9bn from the Bank of England's emergency facility just to keep the business running.

Professor Andrew Clare at Cass Business School, said: "Had the Government not stepped in, there would be no dividend and no company… I'm sure it wasn't the Government's intention for the dividend to be paid."