The European Commission has extended the scope of its in-depth investigation under EC Treaty State aid rules into a UK aid package for Northern Rock. Northern Rock plc, based in Newcastle-upon-Tyne, was the UK's 5th largest mortgage bank with a balance-sheet total of £101 billion as of 31 December 2006 whose core activity is residential mortgage lending, which represents more than 90% of all outstanding loans made by the bank. The aid was authorised for Northern Rock by the Commission in December 2007 and the UK notified a restructuring plan for Northern Rock in March 2008. The Commission opened a formal investigation on 2 April 2008, to assess the package with regard to Northern Rock's prospects for a return to long-term viability. In the same decision, the Commission also authorised another rescue aid measure for Northern Rock.
On 30 March 2009, the UK authorities notified substantial amendments to the support package for Northern Rock. The amended plan provides for a split-up of Northern Rock into two new entities, a relatively small bank containing all the good quality assets, the mortgage writing platform and the retail deposits and a "bad bank" which would hold the vast majority of the mortgage loans made by Northern Rock in the past. The "bad bank" would be wound down on a solvent basis, where the UK State would support the losses incurred on the risky mortgage loans made by Northern Rock in the past. The extension of the in-depth investigation gives interested parties the possibility to comment on the proposed measures; it does not prejudge the outcome.