Nationalised Bank To Be Sold
Northern Rock is back in the news again this week, as the latest episode in the saga of the nationalised lender unfolds.
The bank was taken over by the government in 2007, with a huge loan to stop the lender going under due to the bad debts it had accrued on bad credit loans. Since that time, Northern Rock has restructured itself and paid off a large percentage of the government and UK tax payer loan. Now, the Treasury has announced that Northern Rock is to be sold in order to repay the outstanding loan and clear the debt owed to the tax payer and it is likely that this course of action will take place before the end of this year.
Northern Rock is expected to be split into two sections, one part for the savings element and credit worthy homeowner loan sections of the institution, with the other part being classed as a “bad bank” which will continue to look after the bad loans with arrears and defaults, which remain on its books. Apparently there are already a number of interested parties considering purchasing the good part of the company, including Virgin Money, although this has not been confirmed as yet.
This is the first of the Nationalised banks which will be re privatised by the Government, who will still hold a large share in both the Royal Bank of Scotland and the Lloyds TSB Group.
A spokesman at Northern Rock said “It is our intention to return to the private sector that shouldn’t be a surprise. The legal and capital restructuring that we’re doing will facilitate that. We are restructuring the company to maximise capital efficiency and value for the taxpayer and are looking at a split of the banks. We intend to complete that process in the second half of this year.”
