In a development which will help the bank restructure manifolds, the European Union has said yes to Northern Rock Bank's proposed plans of splitting into two units, which has also paved the way for a potential partial sale. The two businesses which would emerge out of the split have been described as the "good bank" and "bad bank", both with its individual set of roles to fulfill.

"This decision demonstrates once again that the EU's state aid rules provide an appropriate framework to allow state support for a sustainable restructuring of banks without giving individual banks an unfair competitive advantage", EU Competition Commissioner Neelie Kroes said.

While the "good bank" would act as a place where savers' money is held, new loans are approved and few existing mortgages are held, the "bad bank" would be responsible for taking care of holding mortgages and repaying of all outstanding government loans.

The bad bank, according to EU, would eventually be liquidated, after all the loans are repaid, the good bank will be up for sale to a third party. Among potential buyers for the latter are Virgin and National Australian Bank. The restructuring and splitting is expected to happen by year end.