Northern Rock attractive to potential purchasers
Jul 2 2009 by Peter McCusker, The Journal
SPECULATION that Northern Rock will prove attractive to potential purchasers has been further fuelled after Tesco became the latest name to be linked with a bid for its "good" assets.
Financial experts expect the part of the nationalised Newcastle company’s business known as the “good” bank – comprising its 50 branches, retail deposits and some of its stronger mortgage assets – to be sold for up to £5bn if the European Commission allows it to be split in two.
First Virgin and now Tesco have been linked with a bid for the bank, and the “good” part of the Rock may also attract interest from UK and international banks.
Continued speculation on the Rock’s future followed yesterday’s announcement that the Financial Services Authority has agreed to let it continue to breach capital reserve requirements until an EC decision is made on its restructuring.
Northern Rock and the Treasury have outlined a future for the Northern Rock which would see the business split into two separate businesses.
They are now waiting for a decision from the EC and, if approved, the Government will give the Rock a further £3bn, with it then being divided into a good bank, to be known as BankCo, and a bad bank, to be known as AssetCo .
