Nationalised lender Northern Rock will finally be split into two parts in January, although customers have been assured it's business as usual.
The restructure, which was agreed by the European Union in October, will be implemented on 1 January 2010, when the institution will be spilt into two separate companies.
Northern Rock plc has been dubbed the 'good bank' and will hold all savings accounts – which the bank says amounts to approximately £19 billion – and around £10 billion of existing mortgages.
This new section will also hold some wholesale deposits and will be regulated as a deposit taker and a mortgage lender by the Financial Services Authority.
The second bank, called Northern Rock (Asset Management) plc, will hold the vast majority of the mortgage book, valued at £50 billion, although Northern Rock says the majority of these will be fully performing with holders not in arrears.
The bank will write to customers in the New Year to inform them by which bank their accounts will be held.
At present, the plan is to sell off the 'good bank' at a later date, while the 'bad bank' will eventually be liquidated.
"Today is a very important step towards completing the legal and capital restructure of Northern Rock into two separate companies on 1 January 2010," Gary Hoffman, chief executive, said.
"We want this to be a seamless process for our customers and they do not need to take any action. We will be writing to them in early January confirming which company holds their account – but we have already confirmed that all savings accounts will be in the new bank.
"I am pleased with the progress to date and all of the hard work colleagues are doing behind the scenes to ensure this is a smooth process for customers."
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