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Northern Rock Restructuring Set For 1st January 2010

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The Treasury has confirmed Northern Rock restructuring will take place on 1 January 2010. 

The proposed restructuring of Northern Rock received European Commission approval on 28 October 2009 and the Northern Rock plc Transfer Order 2009 has now been laid before Parliament.

The restructuring will strengthen Northern Rock's capital position and enable the bank to return to the mortgage market.  Under the restructuring, Northern Rock's business will be split between two companies - Northern Rock plc and Northern Rock (Asset Management) plc - with the back book of mortgages managed separately from Northern Rock's other business.

This approach reflects the Government's objective of creating a well functioning mortgage market with responsible lending and access to a wide range of affordable mortgages.

As a result of the restructuring, Government guarantees in relation to Northern Rock have been restated to apply to both entities.

Financial Services Secretary Paul Myners said:

"On 1 January Northern Rock will take a further step towards an independent future.  The Government took action to stabilise the bank two years ago, ensuring in the process that not a single customer of the bank lost any of their savings.

"Now we can prepare the bank for its restructuring and ensure that it plays its full role in supporting the recovery of the economy."

** Additional Information & Advice **

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