Northern Rock sell-off backed by EU
European Union gives backing to sell-off of Northern Rock
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By Matt Hallam. |  |
Wednesday, 28, Oct 2009 11:17
By inthenews.co.uk staff..
The European Union (EU) has given its backing to the sell-off of Northern Rock, following plans to split the nationalised bank in two.
The bank is planned to be split into a 'good bank/bad bank' divide, with the good side handling savers' money, new lending, branches and some mortgages, and the bad side holding the rest of the mortgages and repaying government loans.
Backing from the EU's competition commission is hoped to bring back some of the £27 billion of taxpayers money put into the bank when it was nationalised.
Liberal Democrat Treasury spokesman Vince Cable said: "I fear that what might come out of this is that the better bits of the bank will be sold off and sold off cheaply to a private buyer, and the rubbish - the really bad irresponsible loans, the 125 per cent mortgages - they will be left with the taxpayer which will eventually accrue very large losses."
Rumours of other banks splitting in this way have been rife, as some ministers have called for greater competition in the banking sector.
Financial services secretary to the Treasury Paul Myners said: "The government's actions over the past two years to stabilise Northern Rock have protected the savings and deposits of hundreds of thousands of British families. Today's announcement is an important milestone for the bank and its staff."