The European Union is set to give the go-ahead for Northern Rock to be split into two, clearing the way for a partial sale.
Under the plans, the bank will be split into a "good" and "bad" bank. The viable part will be handed to UK Financial Investments with a view to selling it and the bad part of the bank will hold the rest of the mortgages and repay government loans.
The move was criticised by the Liberal Democrats, with Treasury spokesman Vince Cable telling the BBC he was "deeply suspicious" of the plan because it will burden the tax payer with the bad elements of the banks and lead to heavy losses.
Virgin and National Australia Bank have been touted as possible buyers of the viable part of Northern Rock, with revenues from the sale being returned to the taxpayer.
The news comes as speculation has mounted in recent months that Lloyds - which bought HBOS at the height of the financial crisis - will sell its Cheltenham & Gloucester business.
Northern Rock was nationalised in early 2008 after being bailed out by the government.
Since first announcement
In process of recovering money
Expected to complete in Q2
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