Northern Rock Rescue "Could Cost Taxpayer £2bn"

The National Audit Office (NAO) has estimated that taxpayers could lose almost £2bn once the assets of collapsed bank Northern Rock are wound down.

The public spending watchdog also said that taxpayers lost about £480m on the sale of Northern Rock PLC last year.

But the NAO said the sale of the bank to Virgin Money - criticised by some as too early - helped to minimise losses for the taxpayer.

Northern Rock was rescued in 2008 at the start of the financial crisis.

After nationalisation, the bank was split into a mortgage lending and savings arm, Northern Rock PLC, and a "bad bank" of sub-prime assets, Northern Rock Asset Management (NRAM).

Northern Rock PLC was sold Sir Richard Branson's Virgin at the end of 2011, at a loss to the taxpayer estimated by the NAO at £480m.

There was criticism at the time of the sale that the Treasury should have delayed any disposal until market conditions had improved and the taxpayer could get a better return.

But the NAO's head, Amyas Morse, said: "A sale of Northern Rock PLC at the earliest opportunity was the best option to minimise losses on the £1.4bn of public money invested in the bank."

(H)