Election 2010: NRock could be remutualised

Prime Minister Gordon Brown is expected to announce a manifesto in Birmingham today which includes plans to remutualise Northern Rock.

The former building society converted to plc bank status in 1997, but had to be rescued by the taxpayer after it collapsed in 2008.

The bank was fully nationalised in order to prevent a meltdown of the entire UK banking system, and has since been split into a ‘good' bank, which continues to offer mortgages and savings, and a ‘bad' bank (Northern Rock Asset Management), which is being brought together with nationalised Bradford & Bingley, with the aim of its mortgage books being run down over time.

The manifesto is expected to propose that the ‘good' bank is remutualised in order to stimulate competition in the building society sector in the provision of mortgages and savings.

The plan is understood be contained in the economic section of Labour's 10-chapter policy document.