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The Treasury today confirmed plans to back a private sector rescue of Northern Rock through the sale of Government-guaranteed bonds to pay off the crisis-hit lender’s £24 billion debts.

But the funding would be dependent on a “robust and acceptable” business plan and taxpayer guarantees, the Treasury added.

Northern Rock will be taken into “temporary public ownership” if a private sector solution cannot be agreed, it said.

The bond scheme has been drawn up by the Treasury's financial advisers, investment bank Goldman Sachs.

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