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Is Northern Rock being primed for a sale?

Northern Rock has this week announced further cuts in its core mortgage rate as an aggressive push to grab as much of the mortgage market as possible continues. This is the fourth such move in just a fortnight and will see rates fall by 0.64% at a time when competition in the sector is thin on the ground and many competitors are looking to consolidate their positions.

It is no coincidence when you consider that the UK government is awaiting EU clearance regarding a split of the Northern Rock low-risk and high-risk operations, which many believe will be the first stage of a sell-out. When you consider that Northern Rock still owes UK taxpayers over £20 billion and recently required further capital to reorganise the business, it is not difficult to see why the UK government wants to get rid of it as soon as possible.

However, at the time of the bailout Northern Rock was in trouble and the UK banking sector was teetering on the brink and there was little option but to take the operation under state control even though it has cost billions upon billions of pounds. Quite what the UK government can hope to raise from a potential sale in the future is unclear but there is no way that UK taxpayers will see their money returned in one lump sum.

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