The European Commission has given the green light to plans laid out by the new management of Northern Rock to split the nationalised institution into a "good" and "bad" bank.

Europe's competition commissioner, Neelie Kroes, noted that important structural changes, including the split of the bank into two entities, with the good and bad assets separated into each new respective entity, as well as a significant reduction of its market presence, will allow the bank to become viable in the long-term