Brown to pledge to remutualise Northern Rock

Prime Minister Gordon Brown is to announce plans later today to hand shares in Northern Rock to its customers and return the nationalised bank to mutual status, according to reports.

A report on The Daily Telegraph’s website says that Brown will unveil plans to turn Northern Rock back into a building society as part of Labour’s election manifesto which is being launched in Birmingham later today.

The move is aimed at boosting competition in the mutual sector for mortgages and savings products.

Northern Rock Asset Management, the so-called ’bad bank of Northern Rock, is to be merged Bradford & Bingley to bring the two government-owned institutions under a single holding company and under a single point of control.

Vince Cable, shadow chancellor for the Liberal Democrats, has previously said that there is no reason that Northern Rock cannot be re-mutualised as long as the bank can guarantee that it can repay the government.