This website uses cookies to improve user experience. By using our website you consent to all cookies in accordance with our Cookie Policy. Read more

Northern Rock to be sold by Christmas

27 April 2009 / by Rachael Stiles
Nationalised bank Northern Rock will be sold off to the private sector by the end of the year, according to reports, as the Government tries to claw back some of the cash it's pumped into the UK banking sector.

The first bank to fall victim to the credit crunch, Northern Rock was nationalised last February after going to the Government for emergency cash, and will be sold back to the private sector by the end of the year, the Sunday Times has revealed, in an attempt to generate a return for taxpayers who paid for the bank's nationalisation.

Some analysts believe the sale of the bank's assets, including 70 branches, will generate up to £2billion for the taxpayer, but other experts predict the sale could generate losses of around £1.3billion.

It might be divided in a number of different ways for the sale – one possible outcome being that the bank be split into good and bad assets, for instance separating its savings arm from its riskier mortgage business.

Shareholders in Northern Rock reacted with anger to the Government's decision to nationalise it, maintaining that it would have survived as an independent entity, and a group of shareholders are suing the Government for their handling of Northern Rock and the losses they have incurred as a result.

The hedge fund firm SRM Global owned an 11.5 per cent stake in Northern Rock and under its owner, Jon Wood, is part of the group taking legal action against the Government.

The Treasury has "stolen" the controlling stakes which it has taken in Northern Rock and in other banks, Mr Wood said in an interview with the Daily Telegraph, and it stands to make "billions and billions and billions" when they are sold back into the private sector.

Discussions have already taken place with potential buyers, the Sunday Times reported, which are thought to include Virgin Money, Santander (owner of Abbey), and National Australia Bank.

© Fair Investment Company Ltd