Northern Rock's break-up okayed

European Union antitrust regulators approved yesterday a British plan to break up state-owned mortgage bank Northern Rock, allowing the UK Government eventually to sell parts of the lender.

The restructuring proposed by the British authorities is aimed at soothing EU competition concerns and returning the lender to long-term viability.

The European Commission is reviewing a spate of bank bailouts across the EU, with many lenders expected to divest assets, close branches and cut market share in return for regulatory approval for state aid. One example of regulatory-driven changes in European banking came on Monday as aided Dutch bancassurer ING said it would split its operations, leaving the firm's balance sheet 30 per cent smaller.

"The failure of Northern Rock would have had major detrimental effects on the financial stability of the UK economy," said EU Competition Commissioner Neelie Kroes.

 

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