Rock shuts Guernsey unit

City A.M. Reporter
NATIONALISED lender Northern Rock yesterday announced it will close its offshore banking operation in the channel island of Guernsey, another step in its turnaround plan as the lender prepares for a return to private ownership.

Northern Rock, the first major British victim of the credit crunch, said in a statement yesterday it would wind down the business over the coming months before shuttering it in September.

It said the Guernsey subsidiary “no longer meets the long-term commercial objectives of the company”. Northern Rock launched its Guernsey operation in February 1996. It currently has some 6,000 customers – who will have to find new homes for the almost £1bn they have on deposit with the lender.

Meanwhile the bank is understood to be considering plans to offer to buy back its junk-rated debt at a big discount to the orginal value. The move could raise £700m in profit and reduce the cost to taxpayers of running down the lenders so-called bad bank.