Page last updated at 16:44 GMT, Wednesday, 24 March 2010

Northern Rock and B&B 'bad banks' to merge

Northern Rock branch sign
Northern Rock's 'good' bit is moving closer to returning to private hands

The so-called "bad banks" of Northern Rock (now NRAM) and Bradford and Bingley (B&B) plan to merge.

The move is designed to cut costs and bring greater efficiencies for the taxpayer, who owns both businesses.

They are set to be brought under one holding company with a single management team, although there is no firm timetable to complete the plan.

Bradford and Bingley and Northern Rock were split into "good" and "bad" parts in the aftermath of the banking crisis.

The change will not affect customers of the two businesses, who should carry on mortgage payments as normal.

Better half

Bradford and Bingley's better half went to Santander, while Northern Rock was split into Northern Rock Asset Management (NRAM) and Northern Rock plc earlier this year, with a view to eventually returning the latter, stronger part to private ownership.


Until 2007, Northern Rock sold more policies than any other UK lender.
But in September 2007, the BBC revealed that Northern Rock had been granted emergency support from the Bank of England amid the global financial crisis.
The bank was formally nationalised in February 2008.
The UK government split Northern Rock into a "good" bank and "bad" bank (NRAM), paving the way for a sale of its "good" assets to a third party.
Plan to merge NRAM with B&B revealed in March Budget

Neither offers new business and the plan is eventually to wind up the entity.

UK Financial Investments (UKFI), which oversees the country's state-owned bank assets, said it was unclear at this stage how much could be saved in costs by putting together B&B and NRAM.

Staff cuts may form part of the savings, although there is no clarity as to the scale of that at this stage either.

The merger is also expected to help save costs of suppliers and IT systems.

Keith Morgan, head of wholly-owned investments at UK Financial Investments, said: "Northern Rock Asset Management and B&B are now similar companies and operating under this new structure will help deliver efficient management of both companies' closed mortgage books."

The plan to put the two together was widely expected after Richard Pym, chairman at B&B, was also appointed chairman of NRAM late last year.

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