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U.K. lender Northern Rock to be split up

Stephen Beard Oct 28, 2009
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U.K. lender Northern Rock to be split up

Stephen Beard Oct 28, 2009
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Stacey Vanek-Smith: Big news out of Britain this morning. European regulators have OK’ed a plan to split up Britain’s nationalized lender Northern Rock in two. From London, Stephen Beard has more.


Stephen Beard: Europe’s competition commissioner has given her blessing. The British government, which saved Northern Rock from collapse and then nationalized it last year, will be allowed to divide it into a good bank and a bad one. The good bank containing depositors’ cash and sound mortgages will be sold off. The bad bank with most of the dodgy loans will be kept for the time being.

As a result of the bailouts, the British government still owns a vast chunk of the banking system and it wants out, says Chris Hughes of financial Web site Breaking Views.

CHRIS HUGHES: A partial sale of the good bit of Northern Rock is better than nothing if you’re a government that is basically trying to get these banks back to the private sector.

He says that in the process of selling off its banking assets, the government wants to increase competition. It is reportedly pressuring the two other banks in which it holds large stakes to shed some of their subsidiaries.

In London this is Stephen Beard for Marketplace.

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