Nationalised British lender Northern Rock is to be sold off by the end of the year as the UK government seeks to retrieve money pumped into the banking sector, it was reported today.
The government is preparing to split the bank in two in the second quarter to smooth the path for a sale, which could be fast-tracked to take place as soon as the restructure is completed, according to The Sunday Times.
Advisers at Credit Suisse are already understood to be drawing up a sale plan and the Treasury has reportedly sounded out potential buyers including Virgin Money, Clydesdale Bank and Yorkshire Bank owner National Australia Bank and Abbey’s Spanish parent Santander.
It is also thought that private equity firms Blackstone and Towerbrook are looking at the business.
The British government – which is still owed £9.8bn (€10.85bn) in emergency loans given to Northern Rock following its collapse in 2007 – is working on plans to separate its most toxic loans and assets into a so-called “bad bank” that will then enable it to sell on the customer savings and network of 70 branches.
It is expected the bad bank will remain in government hands and may be run by UKFI – the body set up to handle government investments in banks.
The sale would mark the UK government’s first exit from the banking sector bail outs that have seen it also part-nationalise Lloyds Banking Group, Royal Bank of Scotland and Bradford & Bingley.
Experts reportedly believe Britain could lose around £1.3bn (€1.43bn) on the Northern Rock deal, but the Treasury is believed to be keen to push on with a sale to prove to the public that it has an exit strategy for its multi-billion pound bank rescues.