Northern Rock planning to start afresh with new business

Nationalised bank Northern Rock plans to split its old and future business into separate divisions to allow it to grow its new lending business, according to reports.

The Treasury apparently wants the bank to increase its mortgage lending by up to £14 bn over the next two years. The move that will see the brand emerge to tout for new mortgage business once again is subject to European state aid approval, however.

It is unclear how the Government will market the business, which is viewed by many as the emblem brand of the credit crunch.

The Government says any new offers will be closely scrutinised by watchdogs, however. Writing in the Observer newspaper yesterday (22nd February)Prime Minister Gordon Brown says he has asked the Financial Services Authority watchdog to look into how it should control new mortgages for more than 100 percent of a home’s value.

He said that in future that loans should be made on prudent and careful terms, and be available to all borrowers, not just those with large deposits.

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