Northern Rock to split on January 1st

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.