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Northern Rock is set to ask for £3bn more
01.07.09
Northern Rock today said it will need up to £3 billion more from the taxpayer once it splits into a so-called good bank, which can be sold off, and bad bank, which will be almost certainly retained by the Treasury.
But sources close to the nationalised bank played down stories from Westminster that the good bank could be sold to Tesco as early as this autumn.
Splitting the bank in two has to be approved by the European Commission and that is unlikely to happen until September at the earliest. Until then any potential purchaser would have little clear idea what they might be buying.
Tesco, which has been growing its financial services arm, would not be the only bidder for the so-called good bank. Sir Richard Branson's Virgin Money, which originally looked at a Northern Rock bail-out in 2007, would also be keen. Rock technically breached Financial Services Authority rules today on the amount of capital it needs to hold as losses mounted this year. But it has been given clearance by the regulator to carry on as normal until the split takes place.
Reader views (5)
I am sure a lot of people could run a bank if the tax payer always makes up any loses.The government sells the profitable part as usual and lets the taxpayer pick up the huge remaining debt.Then the new owners start paying themself large bonuses again.
- Alan R, Luton Bedfordshire
Why not a public floatation we ex shareholders might like a second chance to get our money back. Why should Tesco or Virgin get a special private deal.
- Billbo9, Gerrards Cross
With the Government desperate to sell before the next election, I suspect that the price obtained by the hasty sale of the profitable part of Northern Rock, for political rather than commercial reasons, will be at rather less than the market rate - or it will not sell until after the election. The taxpayer stands to lose both on the sale of the profitable part of the bank and will of course have to also stump up the £3 billion for the loss making part. There are so many billions of public debt now that the request from Northern Rock almost seems modest - but it is of course yet another rip-off. Gee thanks, Gordon.
- James Elliott, Eastbourne UK
They should have let it go bankrupt and just compensate the savers, can this Government get nothing right?
- Overtaxed, Farnham UK
Ahh Yes! Privatise the profits and nationalise the losses!
- Sam, London
