Government plans to sell Northern Rock

| April 27, 2009

It has been reported by The Sunday Times that the Government is planning to sell crisis-torn Northern Rock by the end of the year.

Under a plan to retrieve some the hundreds of billions of pounds injected into the banking sector, the Government is preparing to divide the nationalised lender into two: one good and one bad bank, according to the newspaper.

It is believed that the bad bank will remain under Government control, managed by the UK Financial Investments (the Government-owned body which was established late last year with the responsibility of maximising value for taxpayers).

Northern Rock’s retail deposit book (valued at around £20 billion) and its network of 70 branches will be auctioned off.

It is believed that bidders include Virgin Money, National Australia Bank and Santander. Private equity firms, Blackstone and Towerbrook, are also understood to have expressed an interest.

The move would represent the Government’s first exit from its million pound banking bailouts, which have seen Lloyds Banking Group and Royal Bank of Scotland part-nationalised.

Northern Rock collapsed at the onset of the credit crunch in autumn 2007 after savers staged a nationwide run on the bank.

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