Northern Rock formally split in two this morning
The Treasury has confirmed that Northern Rock has been split into two separate operations today, commonly referred to as the good bank and the bad bank, with the bad bank renamed Northern Rock (Asset Management). In simple terms the bad bank will be closed to new mortgage arrangements and will retain a £50 billion mortgage book and £4.5 billion of unsecured personal loans.
While 90% of the mortgage book is not in arrears at this point in time, there is obviously concern about the quality of the mortgages and loans which have been left with the bad bank. This then leaves the remainder of the Northern Rock operation to begin a new period of growth although there is speculation that the operation will be sold to either National Australia bank or Virgin Money.
So far there has been no speculation regarding the amount of money which the good bank will raise in the private sector although there is no doubt that Richard Branson has shown a particular interest in this operation on numerous occasions in the past. However, whether his plans will be scuppered by the emergence of a potential new bidder for the operation remains to be seen.
Share this..
Related stories
Household bills account for a quarter of spending
09/11/2013 A report from PricewaterhouseCoopers (PwC) has revealed that over a quarter of household spending goes on energy bills, household costs and water, twice as much as 50 years ago. This means we are now in the most trying time on record in terms of disposable income for households, as energy bills continue to rise and wages remain largely stagnant. The report highlights the fact that...
Read MoreIs Europe becoming a vital subject for the next election?
Today's news that European Union leaders are looking to oversee all EU member country budget deficits is causing concern within political circles. Despite the fact that the UK government has denied that the proposed changes to the European Union set up, which would see the introduction of a new "economic government of the EU", would not apply to the UK because it has not adopted the euro, there ar...
Read MoreBritain's head for the sun, sea and sand
Despite the fact that money for many people is still very tight, even though the UK appears to be coming out of one of the worst recessions of all time, hundreds of thousands of UK travellers are heading for the sun, sea and sand. Even though there are numerous rail engineering works over the bank holiday weekend a further 3500 trains have been laid on compared to last year and more than 1 million...
Read MoreUK government takes first step to bank sell-off
In a surprise move it has been revealed that the UK government has already held various beauty parades as it looks for investment bankers to help offload shares in Royal Bank of Scotland and Lloyds bank. The £70 billion stakes, at cost value, held in the operations look likely to be sold either later this year or early next year with many analysts believing that an overseas bidder will come to th...
Read MoreUK banking analyst attacks Lloyds bank and Royal Bank of Scotland
Jonathan Pierce of Credit Suisse has attacked the recent rise in the share prices of Lloyds bank and Royal Bank of Scotland which between them are now worth around £60 billion, not far from their 2007 high. When you consider the current trading environment as well as the debt situation, maybe the analyst does have a point and potentially the shares have maybe moved ahead too quickly?
Read More