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Will taxpayers make a profit on the sale of Northern Rock?

As the UK government considers a possible sale of Northern Rock, the banking group which was taken in house by the UK government, many people are now starting to discuss whether UK taxpayers will actually see a profit on the deal. With retail deposits worth in the region of £19 billion and a £66 billion loan book there is no doubt that Northern Rock is still a substantial business even after a partial wind down after the initial nationalisation. So what price could taxpayers look to receive?

Unfortunately at this moment in time the UK government has not issued any indication of a possible value for Northern Rock, whether it is sold as one entity or split into two. We also await the next update on the debt owed to the UK taxpayer which was initially in excess of £20 billion but had at one stage fallen substantially. The reality is that taxpayers will probably do well to receive their money back let alone make a profit as the operation has been very expensive to fund and still has a significant number of bad debts on its mortgage book.

However, it will be interesting to see who steps forward with an interest in the operation and at what level any potential bids are pitched at.

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