Northern Rock Bailout 'To Make £11bn Profit'

Northern Rock Bailout 'To Make £11bn Profit'

UK taxpayers are expected to make a net profit of up to £11bn from the nationalisation and resale of Northern Rock, according to UKFI.

UKFI, the body that controls the Government stakes in bailed-out banks and other financial institutions, said taxpayers could eventually expect a return of between £46bn and £48bn cash from Northern Rock.

The Government has provided £37bn of funding to Northern Rock since its collapse in 2007, meaning the taxpayer is in line to make a profit of up to £11bn.

But it will take up to 15 years to be delivered.

UKFI has published details of the sale of the core Northern Rock business to Virgin Money , completed on January 1, and the positive return to taxpayers expected from all the former Northern Rock companies.

UKFI said: "Over time, the return of cash from these companies to the Government is expected to total between £46bn and £48bn.

"However, this cash is expected to be returned over a period of around 10 to 15 years from 2012 as Northern Rock Asset Management Plc is run-down and the remaining Government loan is repaid."

Northern Rock was fully nationalised in 2008 after nearly collapsing during the credit crunch.

The group was starved of funding after banks abruptly stopped lending to each other in the 2007 credit crisis, triggering the first run on a British bank in many decades, and prompting the Government to step in with emergency support.

Four years later, Northern Rock's core business was sold to Virgin Money for between £747m and £1bn.

While this represented a loss on the Government's £1.4bn rescue of the bank during the credit crisis, the deal was deemed to be the best on offer for the taxpayer.