Northern Rock’s proposal to split itself in two has triggered concerns from the European Commission, which must approve the restructuring plan under state aid rules.

The nationalised mortgage bank has submitted a plan to separate out a “good” bank which would take more than £19.5bn ($32.2bn) of retail deposits, wholesale deposits and some mortgage loans. The rest of the bank’s mortgage assets, including those held in its Granite securitisation programme and its government loan, would be placed into a “bad” bank.