View more on these topics

Northern Rock to be split in two

Northern Rock has revealed how it will be split between two mortgage banks in the second half of the year.

The proposed restructuring will split the company into two separate entities. The first lender, “BankCo”, will hold deposits, branches and unencumbered mortgage assets. The second, “AssetCo”, will be made of the Granite master trust, all covered bonds, the Northern Rock mortgage book and all other wholesale instruments. It will also hold the Government loan on its books.

Both lenders will be able to originate mortgages, but “AssetCo” will have a lower regulatory capital requirement. “BankCo” will be a deposit taker.

The Government is continuing to work with the EU Commission to further prove that the state aid offered to Northern Rock was the minimum needed to enable long-term recovery, while avoiding any undue competition bias.

The Government nationalised Northern Rock in February 2008 with a £26bn lifeline. The bank has subsequently paid more than half of that amount back, but has slowed down the repayment in 2009 to concentrate on new lending.

Northern Rock chief executive Gary Hoffman says: “We are confident that our plan offers the best way forward, meets all state aid requirements and offers significant benefit for consumers and value for taxpayers as we position Northern Rock for a return to private ownership.”

In related news, Reuters has reported that Virgin president Richard Branson says he is still keen to buy Northern Rock as a platform for Virgin Money to enter the banking sector.

He told the newswire: “If the Government chose to sell it, we would hope to take advantage. We do think the timing is very good to have a brand people trust to get into banking.

“We are not going to give up. Over the next few months something should come up.”


Income every six months from Blue Sky

Blue Sky Asset Management has brought out a structured product that provides income of 4.5 per cent every six months during a five year term, depending on the performance of the FSTE 100 index.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm