NRK Northern Rock

RNS Number:2742N
Northern Rock PLC
04 February 2008

                            STRATEGIC REVIEW UPDATE


Restructuring Proposal


The Board of Northern Rock plc (the "Company") confirms that, in accordance with
the timetable set out in the announcement by the Tripartite Authorities of 21
January 2008 (the "Announcement"), it has submitted a detailed proposal to the
Tripartite Authorities for a standalone solution for restructuring the Company
(the "Restructuring Proposal"). The Board has requested that the Tripartite
Authorities consider, at the same time as they are considering providing funding
for proposals from other interested parties, whether they are prepared to
provide funding for the Restructuring Proposal on the basis previously announced
by them.

Following the Announcement, the Board has been working with interested parties
to enable them to further develop their proposals for the Company, as well as
continuing to develop the Restructuring Proposal. The Board has provided
interested parties with details of its Restructuring Proposal to maintain
transparency in the process and to enable such parties to improve their
proposals in order to provide a better outcome for the Company's stakeholders.

The Restructuring Proposal would combine a new equity raising of not less than
�500 million (which would be conditional upon EU state aid approval), a
reduction in the assets held on the Company's balance sheet and a reorganisation
of its operations. The Board believes the Restructuring Proposal, once
implemented in full, will result in an independent, well-capitalised, low cost
and significantly lower risk mortgage and savings bank, with two distinct phases
of development:


   *Phase 1: business stabilisation, controlled reduction of current loan
    book, preservation of capital within the balance sheet, strengthening of
    management team through the appointment of Paul Thompson as CEO, with Andy
    Kuipers taking the role of Deputy CEO, pay down of the bond funding proposed
    by HM Treasury to refinance in full the current Bank of England facility and
    removal of Government support

   *Phase 2: modest growth in prime quality lending in line with the
    Company's ability to raise retail and wholesale funds, scope for dividends
    and capital returns


There can be no certainty that the Restructuring Proposal will be supported by
the Tripartite Authorities or that it will be selected by the Board as the best
option for the Company following a further review of other proposals received
and discussions with the Tripartite Authorities. In addition, requisite
shareholder and third party consents may be required for implementation of the
Restructuring Proposal. These consents include, but are not limited to, the
approval by the EU Commission in respect of any state aid involved in the
Restructuring Proposal and the associated financing arrangements.


Notes for Editors

Paul Thompson was Group Chief Executive of Britannic Group and then Resolution
plc between 2002 and 2007. From 1997 to 2002 he was a Managing Director in the
Merrill Lynch Financial Institutions Group where he was an investment banker to
UK and overseas Financial Institutions. From 1991 to 1997 he was a Director with
BZW in London and Canada. Mr Thompson trained as a Chartered Accountant with
Coopers & Lybrand, London.


City Contacts                      Press Contacts

Richard Moorin                     Brian Giles
Investor Relations                 Communications Director
0191 279 4093                      0191 279 4676

Simon Hall                         John C Watson
Investor Relations                 Corporate Communications
0191 279 6090                      0191 279 5295

                                   Ron Stout
                                   Corporate Communications
                                   0191 279 4921

                                   James Murgatroyd
                                   Finsbury Limited
                                   020 7251 3801



The Blackstone Group International Limited ("Blackstone"), Citigroup Global
Markets Limited ("Citi") and Merrill Lynch International, which are authorised
and regulated in the United Kingdom by the Financial Services Authority, are
acting exclusively for Northern Rock plc and no-one else in connection with the
matters referred to in this announcement and will not be responsible to anyone
other than Northern Rock plc for providing the protections afforded to clients
of Blackstone, Citi or Merrill Lynch International nor for providing advice in
relation to the matters referred to in this announcement.






                      This information is provided by RNS
            The company news service from the London Stock Exchange

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