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Northern Rock could take a decade to pay back taxpayer loan

It has been revealed that the Northern Rock could take more than a decade to pay back the billions of pounds owed to the UK government which came to the rescue of the banking operation when it was on the verge of collapse. This comes after news that the European Commission has approved plans for the UK government to split the bank into two separate operations, with the likelihood that the "good bank" will be sold in the short to medium term.

The news that Northern Rock is effectively up for sale is no surprise but the likelihood that it could take more than a decade to repay the taxpayer loan is a surprise to many. This is an operation which the UK government only recently was very confident it could sell on at a profit, for taxpayers, as well as paying back the taxpayer funded loan. However, despite the fact that Northern Rock has been very aggressive in the UK mortgage market of late the company is only worth a fraction of what it was in its heyday and is unlikely to return to the big time in the short term.

In simple terms, while the takeover of Northern rock by the government did rescue the UK banking sector it has been a disastrous investment for UK taxpayers.

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