15 year wait for Northern Rock profit
FAILED bank Northern Rock could return £11bn to the Treasury – but the government may have to wait until 2027 to realise this profit.
UKFI, the body which manages the country’s state bank holdings, claims taxpayers will eventually get between £46bn and £48bn back from the old Northern Rock business.
Northern Rock has received £37bn of taxpayer support since it came close to collapse in 2007 when the inter-bank lending market dried up.
“This means that, in cash terms, the companies are expected to more than repay the original funding provided by the taxpayer,” UKFI said in a report.
But it will take over a decade to claw back these funds.
“This cash is expected to be returned over a period of around 10 to 15 years from 2012 as Northern Rock is run down and the remaining government loan is repaid,” they continued. The predicted profit would represent an annual rate of return of around four per cent on the government’s intervention.
Last November the retail arm of Northern Rock was sold to Virgin Money for an initial £747m, representing a loss of at least £400m.
Consumer accounts have been transferred to the new firm and the Northern Rock name will eventually disappear from the high street.
Another company, Northern Rock Asset Management, which mainly consists of the former bank’s toxic assets, will remain in government ownership for the foreseeable future.
FAST FACTS
● The UK taxpayer could get between £46bn and £48bn back from its stake in Northern Rock
● UKFI also reported yesterday that the government could make up to £22bn on the nationalised Bradford & Bingley bank.