Osborne plans £1bn sale of Northern Rock

Northern Rock is to be sold rather than remutualised or floated on the stock market, the Chancellor said last night.

The deal is expected to value the nationalised lender at about £1bn, resulting in a short-term loss for the taxpayer, which was forced into a £1.4bn rescue of the failed bank, the BBC reports.

Addressing the Lord Mayor's Banquet for Bankers and Merchants of the City of London last night, George Osborne said it was time to "get at least some of our money back", and that "any interested party can bid, including mutuals".

It is expected Virgin Money and Yorkshire Building Society will be among the bidders, and the sale process could start within the next month.

Although the sale of the "good bank" part of Northern Rock is likely to generate a loss, this will be offset in the longer term by the repayment of tens of billions of pounds of state aid loans held in the "bad bank", now known as Northern Rock Asset Management.