THE treasury only had until 2013 to sell a majority stake in Northern Rock, chancellor George Osborne will reveal today in a sharp rebuttal of Labour’s criticism that the government sold the loss-making lender at a bad time.
In a letter replying to a note from shadow financial secretary Chris Leslie, Osborne writes that the government was bound to sell the bank in the next two years “under the terms of the agreement entered into by the previous government” with the European Commission.
The deadline, which is the same as that given to Lloyds to sell 632 branches, had not been made public until now: knowing the government was a forced seller could have given bidders the upper hand.
Osborne suggests that the tight timeline made selling the Rock quickly “even more imperative”, since its losses were chipping away at the £1.4bn in equity injected into the bank by taxpayers in 2010.
He also hits back at suggestions that the bank could have been mutualised: “We did not receive any final bids from mutuals,” he writes, adding that to mutualise the Rock in the absence of a bid would have meant “essentially giving away value”.