Fears of Northern Rock sale recede – for now

Jun 15 2009 By Andrew Hebden, The Journal

Northern Rock cannot begin its proposed restructuring of the business into two separate companies until this final approval is granted. Any sale of the company would be dependent on this restructuring having taken place.

The split has been described in reports as separating the business into a "good bank" – including its retail savings business, branches, new mortgage lending and some mortgage assets – and a "bad bank" which has been described as a home for its "toxic assets".

The bank itself prefers to call the two parts a "bank company" and "asset company" and points out that some parts of the latter are well performing parts of the business.

Yesterday, asked about reports yesterday linking Virgin with a possible deal for the business, a spokesman for Northern Rock said: "The company never comments on market rumour.

"We are proceeding through the state aid application process and we have already talked about our restructuring of the company, which is not planned to take place until the latter part of the year.

"While a return to private ownership remains our objective, it is premature to talk about a sale ahead of the state aid application."