Taxpayers to make £11bn profit from Northern Rock
The government’s purchase of Northern Rock in February 2008 and its recent sale of the bank to Virgin Money, is expected to result in a net profit of up to £11bn for UK taxpayers.
According to UK Financial Investments Ltd (UKFI) which manages the
Government’s stakes in banks bailed out by the state during the credit crunch, taxpayers will receive a return of between £46bn and £48bn cash from Northern Rock over the next 10 to 15 years.
Taking into account the £37bn of funding the bank has received from the government since its failure in 2007, this means that the taxpayer will make a profit of around £11bn.
After Northern Rock was taken into Temporary Public Ownership in 2008 it was split into Northern Rock Plc and Northern Rock (Asset
Virgin Money acquired Northern Rock Plc for between £747 million and £1 billion pounds, while Northern Rock Asset Management Plc will be run-down, allowing cash to be returned to the government in payment of its loan.
Meanwhile, the Mail on Sunday reported claims that UK Asset Resolution (UKAR), which was formed to manage buy-to-let mortgages originally lent by Northern Rock and Bradford & Bingley, is treating landlord borrowers unfairly.
The newspaper reported allegations that UKAR is failing to maintain properties and is putting them into receivership and selling them for less than their market value.
The allegations are being made on consumer websites and are therefore difficult to verify.
UKAR says it aims to deal fairly and sensibly with property owners and deals with them on a case by case basis.
The organisation has 750,000 mortgages on its books and has a responsibility to claw back for taxpayers some of money used by the government to bail out the two banks.