ALISTAIR DARLING, Britain’s chancellor of the exchequer, is expected to delay the sale of the healthy parts of Northern Rock until after the general election, it emerged yesterday, as the nationalised bank announced half-year losses of almost £725 million (€852 million).
Mr Darling said he was in “no hurry” to offload the bank he nationalised in February 2008 but he still believed the rescue operation for the troubled mortgage lender could reap a profit for the taxpayer.
The magnitude of Northern Rock’s problems was laid bare yesterday as it emerged that almost four in 10 of its borrowers have mortgages worth more than the value of their houses, with more than 22,000 borrowers in arrears.
That revelation prompted Tory opposition claims that the government would never get its money back: Northern Rock still owes the government £10.9 billion (€12.8 billion).
“The government told us that the Northern Rock loan book was good but now 39 per cent of it is in negative equity and Northern Rock’s arrears rate is considerably higher than the industry average,” said Philip Hammond, the shadow Treasury chief secretary.
“Gordon Brown and Alistair Darling promised taxpayers our money would be safe and that Northern Rock was a good investment. They were wrong.”
Mr Darling plans to split the Rock into a “good” bank – holding about £20 billion in retail deposits, wholesale deposits and some mortgage loans – while the rest of the bank’s mortgage assets would be placed into a “bad” bank. – (Copyright The Financial Times Limited 2009)
