Northern Rock to be split up

Northern Rock is to be split into two, the government has announced.

The lender is to be divided between a bank that can operate normally as a lender of personal loans, mortgages and credit cards and a second institution that will hold many of the existing toxic debts that originally placed the institution in trouble.

Revealing that it has now received permission from the European Commission for the measure, the Treasury stated that – as it outlined in a white paper on the future of the bank earlier this year – the aim is to ensure that Northern Rock eventually returns to private ownership.

To do this it must provide more competition in the market, it was noted.

In its statement on the decision, the Commission said it was happy that the level of government aid did not give the Rock an unfair advantage, while at the same time should help it develop as a viable bank that can operate privately in time.

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