In what is being considered as the biggest shake up in banking industry in recent years, the European Commission is expected to clear the way for the UK government to divide Northern Rock into a “good bank” and a “bad bank” – reported Bloomberg.
It allows the UK government to sell the first bank nationalised after the credit turmoil played havoc with the financial markets in 2007. According to The Telegraph, the UK Financial Investments will manage the sale and it is expexcted to name Robin Budenberg, a senior UBS banker, as its new chief executive.
Gordon Brown, PM of UK, said: “We expect that once we’ve completed the restructuring of the banks the tax payer will make money. We’re determined to make money out of this.”
In a bid to spur competition, the Treasury is likely to sell the bank’s good assets including mortgages and retail deposits to new firms looking to enter into the UK and create three new banks over the next five years. Reportedly, Virgin Money and National Australia Bank are expected to bid for Northern Rock’s “good bank”.
