The rush on the bank led to its nationalisation by the then Labour government and was a foretaste of global financial chaos to come, bringing with it the economic turmoil from which the world is still recovering.
So the news that the bank is to seek potential buyers in a return to private sector ownership is perhaps a hopeful sign – although it’s worth remembering that the business now being prepared for sale is Northern Rock plc, the "good bank” stripped of the taxpayer loan used to keep it going in 2007 and funded by retail deposits, which made a pre-tax loss of £142 million in the first six months of last year.
Meanwhile, the “bad bank” formed from Northern Rock’s toxic assets has returned to profit and paid back £1 billion of its £22 billion government loan.
UK Financial Investments (UKFI) which looks after the government’s stakes in bailed-out banks, is now seeking expressions of interest from corporate finance advisers in evaluating “strategic options” for Northern Rock plc, which might include a straightforward sale or a stock market flotation.
Those invited to tender will must respond by 31 January though UKFI says no timeframe has yet been set for the return of the company to private ownership and there is “no presumption at this stage” that any particular option will be pursued.
Reports suggest that with the starting point for bidders could be around £1.4 billion, also the figure that the taxpayer has invested in equity in the nationalised bank.
So it’s a case of watch this space and wait for developments, which also gives us the opportunity to wonder what the taxpayer might eventually get back from Northern Rock – and just how long it will take.
For more information, please visit www.glazers.co.uk
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