Poor IT systems at Northern Rock prevented the government from being able to wind down the bank when it became a casualty of the subprime mortgage crisis in 2007, according to the government's auditors.
The "inadequate" IT meant depositors trying to collect their money would have had to wait for a manual process, taking 10 to 12 weeks and with a high error rate, the National Audit Office said.
Making depositors wait for their money would have risked another run on the bank, the NAO wrote in its 'Nationalisation of Northern Rock' report, meaning the government was forced "on practical grounds" to nationalise the bank instead.
Work began quickly after nationalisation "to update the IT systems to enable quicker repayment of depositors if needed at a later stage", the NAO said. But HM Treasury needed to consider whether its own IT systems could process and properly store all of the paper and electronic records being created as part of any nationalisation of a company.
The report concluded that the nationalisation of Northern Rock "offered the best prospect of protecting the taxpayers' interests", but criticised the government for failing to properly test Northern Rock's initial business plan under public ownership.
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