Press Release: State aid: Commission approves restructuring package for Northern Rock

The European Commission approved under EC Treaty state aid rules a package of measures to support the restructuring of UK mortgage bank Northern Rock. The bank will be split into a 'good' bank that will continue the economic activities of Northern Rock and a 'bad' bank, an asset management company which will run down the remaining assets. Following an in-depth investigation launched in April 2008, which was extended due to substantial amendments to the original plan in May 2009, the Commission concluded that the aid is compatible with the EU rules on state aid (Article 87(3)(b) of the EC Treaty), and with the Commission's Communications on the application of the state aid rules to banks in times of crisis. In particular, the Commission was satisfied that the package of measures, including the split, will restore the long-term viability of the 'good' bank and will allow orderly liquidation of the 'bad' bank, without unduly distorting competition.