The intention is to create a single holding company that will own NRAM, which has been dubbed the ‘bad bank’ of Northern Rock, and B&B under common governance and management.
The Government said it was the optimal solution to maximise value for the taxpayer and to create a solid platform for the orderly management of both companies’ mortgage books.
Under the arrangement, both companies will remain as separate legal entities, each with its own balance sheet liabilities and support arrangements.
Full details are not yet established and a firm timescale cannot yet be confirmed.
Northern Rock has assured customers that there are no immediate changes for customers and they do not need to take any action.
The proposal will be subject to regulatory approval from the FSA.
Gary Hoffman, chief executive of Northern Rock Asset Management, said: “This is the next step on the journey for Northern Rock (Asset Management). We are pleased to have reached agreement with UKFI and Bradford & Bingley as to how we can move forward together, to deliver maximum value for the taxpayer.”
