The U.K. government could put billions of pounds more of taxpayer money into nationalized lender Northern Rock PLC under a restructuring plan approved by the European Commission on Wednesday that aims to find a buyer for much of the bank.

The E.U. on Wednesday cleared a series of measures, without imposing the draconian conditions some had feared after Dutch bank ING Group NV (ING) was obliged to split its banking and insurance businesses.

Under the approved plan, Northern Rock will be split into a "good" bank - which will hold the bank's deposits, sound loans and mortgages - and a "bad" bank holding mostly soured loans that will be gradually wound down.

Northern Rock executives in a conference call said that an existing loan of around GBP15 billion will be topped up with GBP8 billion to fund new lending - that will be subject to caps until the end of 2011 - as well as GBP3 billion in new capital plus a working capital liquidity facility.

The commission said it is satisfied the restructuring package will restore the good bank's long-term viability and allow the bad bank to be liquidated in an orderly fashion.

Northern Rock will only be able to lend GBP9 billion next year and GBP8 billion in 2011, while it will be limited to hold no more than GBP20 billion in deposits, near its current GBP19 billion mark.

The commission's investigation also found the financial aid package in the plan was kept to a minimum as required under E.U. state-aid rules and won't give the business an undue advantage over rivals.

"The failure of Northern Rock would have had major detrimental effects on the U.K. mortgage market and the overall financial stability of the U.K. economy," EU Competition Commissioner Neelie Kroes said.

The U.K. government's financial support includes recapitalization measures of up to GBP3 billion, liquidity measures of up to GBP27 billion and guarantees covering several billion pounds of liabilities.

-By Carolyn Henson and Margot Patrick, Dow Jones Newswires; +32 2 741 1481; carolyn.henson@dowjones.com