Government welcomes approval of Northern Rock restructure
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Issued 28 October 2009
The Government has today welcomed the European Commission’s (EC) approval of
the legal and capital restructure of Northern Rock.
The restructure will strengthen Northern Rock’s capital position and enable
the bank to return to the mortgage market and support the economic recovery as
by proposed by the Government in February. Under the restructure, the back book
of mortgages will be managed separately to Northern Rock’s other businesses.
The Government has made clear that it wants to see a well functioning
mortgage market with responsible lending and access to a wide range of
affordable mortgages. The approach towards Northern Rock is part of meeting
Financial Services Secretary to the Treasury Paul Myners said:
“The Government’s actions over the past two years to stabilise Northern Rock
have protected the savings and deposits of hundreds of thousands of British
families. Today’s announcement is an important milestone for the bank and its
Government guarantees in relation to retail deposits with Northern Rock,
announced in the autumn of 2007 remain in place.
As previously stated, the Government’s objectives in relation to Northern
Rock are to support financial stability, protect depositor’s money and protect
the interest of the taxpayer. The Government announced in its white paper in
July that one of the conditions for the eventual sale of the bank will be that
it must promote competition in the banking sector.
1. Since March 2008 Northern Rock has operated under a competitive framework
that restricted its commercial activities in specific areas, in order to
prevent Northern Rock gaining unfair advantage as a result of government
2. The state aid package approved today contains a number of compensatory
measures that will replace the existing competitive framework within which
Northern Rock currently operates.
3. The package is subject to final Ministerial approval, expected later this
4. For further detail in relation to today’s announcement visit:
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Article Published/Sorted/Amended on Scopulus 2009-10-29 20:38:32 in Economic Articles