EU to allow Rock plan to split itself up

The European Commission (EC) is expected to approve plans to split Northern Rock into a &ldquo;good&rdquo; and &ldquo;bad&rdquo; bank by the middle of next week, paving the way for the break-up and sale of the nationalised bank. <br /><br />The EC is set to authorise the plans next Wednesday. They were originally submitted by Northern Rock, led by chairman Ron Sandler, earlier this year. The proposals are designed to separate the bulk of the bank&rsquo;s retail deposits and low-risk mortgage loans into a good bank to be sold off. <br /><br />It high-risk mortgages, including those held in its Granite securitisation programme, will be placed into a separate company &ndash; or &ldquo;bad&rdquo; bank &ndash; that will remain under government control.<br /><br />Alistair Darling, chancellor, hopes to separate Northern Rock towards the end of the year as a prelude to a sale of the good part of the bank in 2010. <br /><br />Officials close to the Brussels negotiations with Northern Rock say Neelie Kroes, EU competition commissioner, could impose restrictions on Northern Rock&rsquo;s ability to write new savings and loans business to make amends for the state aid it has received so far. <br /><br />Northern Rock is already limited to writing just 1.5 per cent of UK retail deposits and 2.5 per cent of new mortgage lending. <br /><br />Earlier this month the government also said it would sell off &pound;16bn worth of state-owned assets in a bid to shore up public finances. These include the Tote bookmakers and the Dartford crossing.<br />