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Will Northern Rock be given away?

As it becomes more and more apparent that the UK government would like to dispose of Northern Rock before the general election there are serious concerns that the company will be "given away". Despite an attempt by a number of MPs to persuade the government to convert Northern Rock back into a mutual society, this particular avenue looks to be a non-starter. In all honesty the Northern Rock has been a disaster for the UK government having digested billions upon billions of pounds of taxpayer's money with little likelihood of a return in the short to medium term.

This week's news that the company will be split into it a "bad bank" and a "good bank" is the first sign that a sale is imminent with Virgin Money rumoured to be the preferred buyer. While it has not made the headlines, it is now known that Northern Rock still was £20 billion of a UK taxpayer loan to pay off having paid back around £10 billion over the last few months. It seems unlikely that a would-be buyer would pay off the £20 billion loan in one go and it could be years before the UK government, and UK taxpayers, receive their money back.

Even after a sale of Northern Rock is agreed, the UK government still has Lloyds bank and the Royal Bank of Scotland to contend with!

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