Northern Rock rescue could cost taxpayer £2bn

The National Audit Office said the bank could cost £2bn.

Photograph: Getty Images

The Government's spending watchdog said that the taxpayer could lose £2bn once Northern Rock's assests are wound down.

The National Audit Office said it would expect the taxpayer to lose £480m of its original £1.4bn investment, but that this could increase to  £2bn by the time the assets are fully wound down.

They said that the sale of the bank to Vigin Money happened at the right time and helped to prevent further losses.

However, they also said that the decision to split Northern Rock into a “good”  bank - the mortgage lending and savings arm, Northern Rock PLC - and a "bad" bank of sub-prime assets, Northern rock Asset management - had not been well thought through in terms of cost to the taxpayer.