Northern Rock sale plans progress

by Gill Montia

Story link: Northern Rock sale plans progress

The Treasury is investigating the possibility of offloading Northern Rock this autumn, according to The Times.

Back in April, the newspaper reported that Credit Suisse had been instructed to develop a plan of sale under which the nationalised lender would be split into two: one good and one bad bank.

Such a move would probably involve the Rock’s less desirable assets remaining in government hands and under the watchful eye of UK Financial Investments, while its retail deposit book (valued at around £20 billion) and its network of 70 branches would be auctioned off.

It is understood that options now under consideration by ministers include a flotation on the stock market, a sale to another bank to another financial institution and returning the lender to its original mutual status.

An autumn sale could provide political gain for the Government, which may be calling a General Election towards the end of the year.

However, Northern Rock is currently primed to bolster the UK’s beleaguered housing market.

In February, the bank pledged up to £14 billion of new mortgage lending over the course of the next two years (£5 billion in 2009 and up to £9 billion in 2010) and it is difficult to conceive how a new owner could deal with such a commitment.