Update: EU approves Northern Rock split

28th Oct 2009 11:47

The European Commission has approved plans to break up Northern Rock into a 'good' and a 'bad bank'.The good part will include its branch network, its good loans and ongoing mortgage business, while the bad part will hold the remaining toxic assets and will be wound down over time.The British government is expected to sell the viable part of Northern Rock ahead of next year's general election.EU Commissioner Neelie Kroes said the restructuring 'will allow the bank to become viable in the long term and limit distortions of competition.'For Northern Rock customers it is business as usual and they need take no action, the bank said in a statement.Part-nationalised lenders Lloyds Banking and Royal Bank of Scotland will also be broken up over the next three to five years, according to the Independent.Meanwhile, the Telegraph reports that the government could clawback as much as £1.5bn of taxpayers' cash once the sale of Northern Rock assets goes ahead.