The run on deposits at Northern Rock in September 2007 was one of the key moments in a financial crisis. After nationalising Northern Rock in February 2008, the Treasury eventually decided to split out a new retail bank, (qNorthern Rock plcq), for sale, and to run-down the majority of the mortgage assets in a separate public sector vehicle, Northern Rock (Asset Management) plc (qNRAMq). Northern Rock plc was sold to Virgin Money in 2011 for proceeds currently estimated at Ap931 million, an expected loss of Ap469 million. The Treasury hopes to recover all the public funds provided to Northern Rock but this is far from certain as it relies on a profitable wind-down of NRAM. Moreover there will still be an economic loss, currently estimated at Ap2 billion. The Treasury took too long to nationalise the bank and failed to make an effective challenge to the bank's business plan. The Treasury has started to address this lack of capacity: it has established UK Financial Investments (qUKFIq) with a small team of 12 people to manage the taxpayer shares in banks. The Ap66 billion cash spent purchasing shares in RBS and Lloyds may never be recovered. In hindsight, the Treasury's decision to create and sell a new bank turned out to be no worse than any available alternative, because no matter which part of the bank was sold, or when, a larger amount of assets would need to be retained in public ownership.Northern Rock plc was sold to Virgin Money in 2011 for proceeds currently estimated at Ap931 million, an expected loss of ... It took too long to nationalise the bank and failed to make an effective challenge to the banka#39;s business plan, first afteranbsp;...
|Author||:||Great Britain: Parliament: House of Commons: Committee of Public Accounts|
|Publisher||:||The Stationery Office - 2012-11-16|