Taxpayer will be rewarded for Northern Rock support

Steve Dinneen
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THE taxpayer will be fully rewarded for rescuing Northern Rock from the brink of collapse, according to chairman Ron Sandler.

But he claimed it was “highly unlikely” the bank would be sold prior to the general election.

The government injected more than £1.4bn restructuring the bank earlier this month but now looks set to reap as much as £2bn when it is sold.

The restructuring involved separating Northern Rock plc, a £20bn, 76 branch operation, from Northern Rock (Asset Management), the “bad bank” that contains around £80bn of questionable assets. The government hopes to attract bids for the “good bank” in the lead-up to the election. It transferred Northern Rock’s £350m pension scheme into the “bad bank” part of its business.

Blackstone, the US private equity firm, has been approached by Sir Richard Branson’s Virgin Money about backing a renewed bid for the bank.

Whether the Asset Management business eventually realises its value will only become clear further down the line when it is seen if mortgages are converted into cash.