Member Article

Darling wants Rock sale to 'boost competition'

The future sale of Northern Rock will be aimed at reviving competition in the banking sector, according to the government.

The Chancellor will this week outline plans to sell the nationalised lender to a buyer with ‘little presence’ in the mortgage market.

On Wednesday Alistair Darling’s White Paper on banks and regulation reform will reveal that the Treasury aims to bring back the traditional rivalry between banks.

It is understood that Mr Darling now wants to see new players emerge, using Northern Rock’s sale as a way to bring on board an entrant looking to gain market share and a high street foothold.

It emerged over the weekend that Northern Rock had begun offering mortgages to existing customers for the first time since late 2007. The move was widely seen as a way to make it more attractive to bidders and smooth the path for a sale before the end of the year.

Several suitors have already reportedly been identified, including Virgin Money, which tried to buy Northern Rock at the time of its collapse in 2007 before the group’s eventual nationalisation in February 2008.

As part of its sale plans for Northern Rock, the Government is preparing to split the bank in two, hiving off its most toxic loans and assets into a so-called “bad bank” which will then enable it to sell on the customer savings and network of 70 branches.

The ‘bad bank’ would likely remain in Government hands.

This was posted in Bdaily's Members' News section by Ruth Mitchell .