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Northern Rock: Osborne reveals EU deal over 2013 sale Northern Rock: Osborne to reveal EU deal over 2013 sale
(40 minutes later)
  
The chancellor is to say for the first time that the UK had to sell Northern Rock by the end of 2013, due to a deal between the last government and the EU. Chancellor George Osborne is to say for the first time that it had to sell Northern Rock by 2013 under a deal signed by the former Labour government.
The bank was sold on Thursday to Virgin Money for £747m.The bank was sold on Thursday to Virgin Money for £747m.
Northern Rock was nationalised in 2008 following its near collapse at the onset of the global credit crunch. Northern Rock was nationalised in 2008, following its near-collapse at the onset of the global credit crunch.
George Osborne is expected to issue a strongly-worded response to opposition critcisms and say the sale offered the "best possible deal" for the taxpayer. Mr Osborne is expected to issue a strongly-worded response to opposition criticisms and say the sale offered the "best possible deal" for the taxpayer.
Shadow Treasury minister Chris Leslie had sent a letter to Mr Osborne raising concerns about the value and timing of the sale. Shadow Treasury minister Chris Leslie had sent a letter to Mr Osborne, raising concerns about the value and timing of the sale.
The chancellor will reveal that, under the deal negotiated by his predecessor Alistair Darling with the European Commission over state aid to banks, the government had to sell the majority of its stake by the end of 2013. The chancellor will say that, under the deal negotiated by his predecessor Alistair Darling with the European Commission over state aid to banks, the government had to sell the majority of its stake by the end of 2013.
This deadline had never been made public.This deadline had never been made public.
Mr Osborne also said the sale's valuation of Northern Rock's "price-to-book value ratio" - that is, its assets minus its liabilities - is higher than peers Barclays, Lloyds TSB or the Royal Bank of Scotland.Mr Osborne also said the sale's valuation of Northern Rock's "price-to-book value ratio" - that is, its assets minus its liabilities - is higher than peers Barclays, Lloyds TSB or the Royal Bank of Scotland.
BBC business editor Robert Peston said - as taxpayers had injected £1.4bn into Northern Rock in 2010 - that the sale would see a "paper" loss of somewhere between £400m and £650m.BBC business editor Robert Peston said - as taxpayers had injected £1.4bn into Northern Rock in 2010 - that the sale would see a "paper" loss of somewhere between £400m and £650m.
But there is the potential for the Treasury to receive a further £280m over the next few years.But there is the potential for the Treasury to receive a further £280m over the next few years.
'Imperative''Imperative'
That deal with European authorities "left the new government with a limited window to get Northern Rock Plc back into the private sector," Mr Osborne will say in his reply to Mr Leslie.That deal with European authorities "left the new government with a limited window to get Northern Rock Plc back into the private sector," Mr Osborne will say in his reply to Mr Leslie.
"Given we were advised Northern Rock plc would have been likely to remain loss-making at least well into 2012, which would have depleted taxpayer resources still further, agreeing a sale now was even more imperative.""Given we were advised Northern Rock plc would have been likely to remain loss-making at least well into 2012, which would have depleted taxpayer resources still further, agreeing a sale now was even more imperative."
The previous Labour government in 2010 split the bank into two, Northern Rock plc, and Northern Rock (Asset Management), into which was placed its bad debt.The previous Labour government in 2010 split the bank into two, Northern Rock plc, and Northern Rock (Asset Management), into which was placed its bad debt.
The so-called "bad" bank was saddled with the cost of being bailed out and still owes the Treasury £21bn.The so-called "bad" bank was saddled with the cost of being bailed out and still owes the Treasury £21bn.
The government has said it had no plans to sell Northern Rock (Asset Management).The government has said it had no plans to sell Northern Rock (Asset Management).
The sale of Northern Rock plc is expected to be completed on 1 January 2012.The sale of Northern Rock plc is expected to be completed on 1 January 2012.