The European Union has approved plans for nationalised bank Northern Rock to be split in two – paving the way for a partial sale.
One business, described as the “good” bank, would hold savers’ money, carry out new lending and hold some existing mortgages. A second “bad” bank will hold the rest of the mortgages and repay outstanding government loans before being liquidated. Northern Rock was the UK’s market leader but in September 2007 Northern Rock was granted emergency financial support and then formally nationalised in February 2008. The EU is reviewing bank bailouts across its 27 member states. Dutch ING was given 10 billion euros in government aid in October 2008. The financial services group is a prime example of regulatory-driven changes in European banking. It plans to split its operations, cutting its balance sheets by 30% and replaying half the aid early.