The sale of Northern Rock to Virgin Money will not include the Granite RMBS that are tied to the bank's name, according to Royal Bank of Scotland (RBS) analysts.

The U.K. government today announced it plans to sell Northern Rock to Virgin Money. The deal will bring in £747 million ($1.17 billion) in cash on closing, with an additional £50 million in cash within six months. It also comprises Tier 1 Capital notes for £150 million and an additional cash consideration of £50 to £80 million on any further sale or IPO in the next five years.

Northern Rock is fully independent of Northern Rock Asset Management (NRAM), which is behind the Granite RMBS transaction, the legacy covered bond program as well as the unsecured lending.
According to RBS, the government announcement specifically stated that it has no plans to sell NRAM. NRAM has been combined with Bradford & Bingley under a single holding company that aims to wind down the institutions to repay its £50 billion debt to taxpayers.

"As a result we believe this announcement should not have any direct implications for the main outstanding securitization programs," analysts said.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.