UKFI, the body that manages the government’s stakes in bailed out banks, has revealed that taxpayers can expect a return of between £46bn and £48bn cash from the sale of Northern Rock.
The government has provided £37bn of funding to the bank since its near-collapse in 2007 and nationalisation in 2008.
This means that UK taxpayers will see a profit of between £9bn and £11bn on the bailout and sale of Northern Rock plc to Virgin Money Holdings, which completed on 1 January 2012.
The report, on the rationale behind the sale, stated: “In cash terms, the companies are expected to more than repay the original funding provided by the taxpayer.”
However, the return will be over a period of around ten to 15 years from 2012, as “bad bank” Northern Rock (Asset Management) is run down and the remaining government loan is repaid.
So far, £18bn has been received since the initial government intervention in September 2007.
On 17 November last year, the Treasury announced it had sold Northern Rock to Richard Branson’s Virgin Money for £747m, at a £650m loss on the £1.4bn of capital it injected into the bank.
Despite the loss, the sale was deemed in the best interest of taxpayers.
