News
Northern Rock Repays £2bn of Government Loan
02 - 03 - 2012
The ‘bad’ part of bank Northern Rock repaid £2bn of the government's loan in 2011. It still owes £19.7bn.
“Taxpayers may eventually end up with a genuine profit on the 2008 nationalisation of Northern Rock” says BBC News Business Editor, Robert Peston.
Northern Rock, which collapsed during the credit crunch, was nationalised in February 2008. In 2010 the bank split into its ‘good’ and ‘bad’ parts. The ‘good’ bank was sold to Virgin Money in November 2011.
UK Asset Resolution, the firm responsible for running down the bad loans of the ‘bad’ part of the bank, Northern Rock Asset Management (NRAM), and Bradford & Bingley, said that NRAM made a pre-tax profit of £789.9m last year, more than four times the £191.3m profit of 2010.
This is due to a reduction loans going bad and also reduced running costs.
UK Financial Investments, which manages taxpayers' holdings in banks, estimates that the government will have generated a cash surplus of £10bn when all Northern Rock's mortgages are eventually repaid.
The objective is to wind down the ‘bad’ bank. NRAM is, therefore, closed to new lending.
