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| Version 3 | Version 4 |
|---|---|
| EU 'to back Northern Rock split' | EU 'to back Northern Rock split' |
| (about 2 hours later) | |
| The European Union (EU) is set to approve plans for nationalised bank Northern Rock to be split in two - paving the way for a partial sale. | The European Union (EU) is set to approve plans for nationalised bank Northern Rock to be split in two - paving the way for a partial sale. |
| One business, to be known as the "good bank" would hold savers' money, carry out new lending, and hold some existing mortgages. | One business, to be known as the "good bank" would hold savers' money, carry out new lending, and hold some existing mortgages. |
| A second "bad" bank would be set up to hold the rest of the mortgages and repay outstanding government loans. | A second "bad" bank would be set up to hold the rest of the mortgages and repay outstanding government loans. |
| Meanwhile, reports say Royal Bank of Scotland and Lloyds will also be split. | Meanwhile, reports say Royal Bank of Scotland and Lloyds will also be split. |
| The chairman of the Treasury Committee, John McFall, said he thought the decision to split Northern Rock was a good one. | The chairman of the Treasury Committee, John McFall, said he thought the decision to split Northern Rock was a good one. |
| FROM THE TODAY PROGRAMME More from Today programme | |
| "It provides a healthy bank, and it provides confidence to the market and it's a good signal," he told the BBC. | "It provides a healthy bank, and it provides confidence to the market and it's a good signal," he told the BBC. |
| But the Liberal Democrat Treasury spokesman Vince Cable said he was "deeply suspicious" of the move. | But the Liberal Democrat Treasury spokesman Vince Cable said he was "deeply suspicious" of the move. |
| "I fear that what might come out of this is that the better bits of the bank will be sold off and sold off cheaply to a private buyer, and the rubbish - the really bad irresponsible loans, the 125% mortgages - they will be left with the taxpayer which will eventually accrue very large losses," he said. | "I fear that what might come out of this is that the better bits of the bank will be sold off and sold off cheaply to a private buyer, and the rubbish - the really bad irresponsible loans, the 125% mortgages - they will be left with the taxpayer which will eventually accrue very large losses," he said. |
| New players | New players |
| Reports in recent months have suggested that Lloyds - which bought HBOS at the height of the crisis - will spin off its Cheltenham & Gloucester business. Meanwhile RBS is expected to separate out its old Williams & Glyn brand. | Reports in recent months have suggested that Lloyds - which bought HBOS at the height of the crisis - will spin off its Cheltenham & Gloucester business. Meanwhile RBS is expected to separate out its old Williams & Glyn brand. |
| Ministers are thought to want more competition in the market, believing the sector is too dominated by Barclays, HSBC, RBS and Lloyds. | Ministers are thought to want more competition in the market, believing the sector is too dominated by Barclays, HSBC, RBS and Lloyds. |
| Even if the UK government did not act, the European Commission may force Lloyds and RBS to spin off some of their subsidiaries in an attempt to prevent banks that are being propped up by state aid from having too much of a stranglehold on the market. | Even if the UK government did not act, the European Commission may force Lloyds and RBS to spin off some of their subsidiaries in an attempt to prevent banks that are being propped up by state aid from having too much of a stranglehold on the market. |
| If RBS and Lloyds did have to sell off some of their branch networks, it could lead to an "interesting shake-up" of the banking system, the BBC's chief economics correspondent Hugh Pym said. | If RBS and Lloyds did have to sell off some of their branch networks, it could lead to an "interesting shake-up" of the banking system, the BBC's chief economics correspondent Hugh Pym said. |
| New players such as Tesco or Virgin could enter the market, increasing competition, he said. | New players such as Tesco or Virgin could enter the market, increasing competition, he said. |
| Taxpayer returns | Taxpayer returns |
| If, as expected, the EU approves the split of Northern Rock on Wednesday, the government will begin exploring sale options. | If, as expected, the EU approves the split of Northern Rock on Wednesday, the government will begin exploring sale options. |
| While the "bad bank" is likely to remain in government hands for some time, a deal for the rest of the business could potentially be completed before the general election next year. | While the "bad bank" is likely to remain in government hands for some time, a deal for the rest of the business could potentially be completed before the general election next year. |
| Among those named as potential buyers of the "good" bank are Virgin and National Australia Bank - owner of the Clydesdale and Yorkshire Bank. | Among those named as potential buyers of the "good" bank are Virgin and National Australia Bank - owner of the Clydesdale and Yorkshire Bank. |
| Revenue from the sale would be returned to the taxpayer. | Revenue from the sale would be returned to the taxpayer. |
| Northern Rock was rescued from collapse in the autumn of 2007, and formally nationalised in early 2008. | Northern Rock was rescued from collapse in the autumn of 2007, and formally nationalised in early 2008. |
| The idea of a split was first outlined earlier this year as part of a changed government strategy for the bank. | The idea of a split was first outlined earlier this year as part of a changed government strategy for the bank. |
| Earlier this year Northern Rock said it would slow down its previous plan, which had been to raise money by redeeming its mortgage loans as fast as possible. | Earlier this year Northern Rock said it would slow down its previous plan, which had been to raise money by redeeming its mortgage loans as fast as possible. |
| At the government's behest it has now agreed to start expanding its lending again, by an extra £14bn worth of mortgages in the next two years. | At the government's behest it has now agreed to start expanding its lending again, by an extra £14bn worth of mortgages in the next two years. |
| Total taxpayer support for the bank has amounted to £26.9bn, although most has now been repaid. | Total taxpayer support for the bank has amounted to £26.9bn, although most has now been repaid. |
| The plan is that the remaining amount will be repaid by the end of 2010. | The plan is that the remaining amount will be repaid by the end of 2010. |