Government close to a deal on Northern Rock shake-up
Sep 24 2009 by William Green, The Journal
A SHAKE-UP of Northern Rock that could pave the way for the sale of its so-called "good" parts could be unveiled within weeks.
Concerns about jobs may be raised after the Treasury told The Journal that it expected to make further announcements about the Rock soon, although it refused to go into detail.
Speculation is growing that plans to split the lender in two will soon be announced, with the Treasury and Northern Rock said to be close to an agreement on how the divisions will be run.
The bank’s retail deposits and branch network would be hived off into what has been called a "good bank" – officially known as BankCo, while the "bad bank" – named AssetCo – would hold billions of pounds of the Rock’s old bad debts.
The new arrangement could make a sale of the former more likely, potentially as early as next year. It comes after Liberal Democrat Treasury spokesman Vince Cable told The Journal the Tories and Labour may sell the Rock off "quickly and cheaply" in a desperate bid to get Britain’s public finances back in order.
Both the Treasury and Tories are said to want to increase competition into the high street banking sector, making a sale to a new entrant possible.
