The restructure of
Northern Rock will take place on 1 January 2010, the Treasury has
confirmed today. The Northern Rock plc Transfer Order 2009 was
made by the Treasury and laid before Parliament this morning.
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."
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 with the back book of mortgages managed
separately to 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.
The proposed restructuring of Northern Rock received European
Commission approval on 28 October 2009.
1. As previously announced, the restructuring of Northern Rock
will result in two separate companies. As a result of the
restructuring, Government guarantees in relation to Northern Rock
have been restated to apply to the two entities.
2. Government guarantee arrangements for Northern Rock plc:
http://www.hm-treasury.gov.uk/d/northernrockplc_guarantee_agreement.pdf
3. Government guarantee arrangements for Northern Rock (Asset
Management) plc:
http://www.hm-treasury.gov.uk/d/northernrockassetmanagement_guarantee_agreement.pdf
Contacts:
HM Treasury Press Office
Phone: 020 7270 5238
NDS.HMT@coi.gsi.gov.uk