Sale of Northern Rock recommended

The Treasury has been advised it should sell Northern Rock, rather than hand it back to taxpayers or float it on the stock market, it was reported yesterday.

Deutsche Bank carried out a review of options available for the nationalised bank and recommended that a straight sale was the most cost effective way for the Government to relinquish control, The Observer said.

UK Financial Investments, the body that oversees the Government’s stakes in rescued banks, and which commissioned Deutsche Bank, has now recommended to the Treasury it sell the bank.

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Treasury officials said the Chancellor, George Osborne, will now make a decision on the future of the Newcastle-based bank, though this will not necessarily mean an immediate sale.

The bank was split into two after it was nationalised in 2008. The part now being considered for sale is the “good” arm consisting of its retail savings base and about 70 branches.

Sir Richard Branson’s Virgin Money and building societies Coventry and Yorkshire are said to be interested in bidding for it.