B&B and Northern Rock set to merge bad banks
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Bradford & Bingley and Northern Rock are reportedly close to agreeing a merger which would combine B&B’s loan book with Northern Rock Asset Management.
A report in The Sunday Times says that B&B is about to receive approval from the European Commission over its state aid package which will pave the way to a merger with Northern Rock Asset Management.
Northern Rock was restructured at the beginning of January, separating the lender into two companies.
As a result of the restructure the newly created Northern Rock plc holds all existing savings accounts,some mortgages, and will offer new savings and mortgage products to new and existing customers.
The remaining part of the company, Northern Rock Asset Management, also dubbed the ‘bad bank’, will hold most of the mortgages as well as unsecured loan accounts.
B&B went through a similar process when it was part-nationalised in September 2008.
Santander bought B&B’s savings business and branch network, while the loan book went under government control.
Richard Pym, chairman of B&B, was also appointed chairman of Northern Rock Asset Management last year, a move which was thought to be an early indicator that the two banks would merge.
A spokeswoman for Northern Rock says: “As we have previously said, the government has asked us to look at ways in which we can co-operate with B&B further, but it is too early to speculate on this.”
A spokesman for B&B says: “At the moment we are awaiting the decision from the European Commission on state aid.
“Anything else is just speculation.
“It’s natural that we could work together with Northern Rock as we’ve obviously got similar businesses. It’s natural that there’s speculation but at the moment that’s all it is.”
