Rock ‘could cost UK £1.28bn’

The nationalisation of the ailing bank Northern Rock could cost taxpayers £1.28bn, government advisers have warned. The crisis-hit bank’s debt to the government currently stands at £17.5bn after it paid off £9.4bn of its £26.9bn loan back to the Bank of England ahead of schedule. However there are concerns it will find it harder to raise the remaining funds by offloading mortgage customers on to other lenders as the housing market worsens.

Goldman Sachs, which advised the government on the best way forward for Northern Rock, has told the Treasury that the nationalisation could cost the taxpayer up to £1.28bn in the ‘worst-case scenario’.