Nationalisation of Northern Rock

In 2008 the Northern Rock bank was nationalised by the British Government, due to financial problems caused by the subprime mortgage crisis. In 2010 the bank was split into two parts (assets and banking) to aid the eventual sale of the bank back to the private sector.

On 14 September 2007, the Bank sought and received a liquidity support facility from the Bank of England, as a result of its exposure in the credit markets, during the 2008 financial crisis. On 22 February 2008 the bank was taken into state ownership. The nationalisation followed two unsuccessful bids to take over the bank, neither being able to fully commit to repayment of savers' and investors' money.

In 2012 Virgin Money completed their purchase of Northern Rock from UK Financial Investments (UKFI) for approximately £1 billion and by October of that year the high street bank operated under the Virgin Money brand.

On 12 September 2007, Northern Rock asked the Bank of England, as lender of last resort in the United Kingdom, for a liquidity support facility due to problems in raising funds in the money market to replace maturing money market borrowings. The problems arose from difficulties banks faced over the summer of 2007 in raising funds in the money market. The bank's assets were always sufficient to cover its liabilities in the long run, but it had a liquidity problem because institutional lenders became nervous about lending to mortgage banks following the US sub-prime crisis. Bank of England figures suggest that Northern Rock borrowed £3 billion from the Bank of England in the first few days of this crisis.

With shares in Northern Rock plummeting by nearly a third, the British Government moved to reassure investors with the bank, with account holders urged not to worry about the bank going bust. The Treasury select committee chairman John McFall MP said: "I don't think customers of Northern Rock should be worried about their current accounts or mortgages."

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