Disposal

Legal & General Group PLC
4 July 2002



4 July 2002

           NORTHERN ROCK TO BUY LEGAL & GENERAL BANKING SUBSIDIARIES

In a move which will strengthen their existing relationship, Legal & General
Group Plc and Northern Rock plc today announce the sale by Legal & General of
Legal & General Bank Ltd (LGB) and Legal & General Mortgage Services Ltd (LGMSL)
to Northern Rock for an estimated total of £131m, payable in cash. The
transactions, which will generate a pre-tax profit of £36m (£36m post tax) to
Legal & General, are subject to regulatory approval, including that of the
Financial Services Authority. Completion is planned for 1 August 2002.

LGB manufactures and distributes residential mortgages, personal loans, and
retail deposits to nearly 106,000 customers. As at 31 May 2002, LGB had £1.2bn
of mortgages, £65m of personal loans and £1.2bn of retail deposits. LGMSL was
Legal & General's original mortgage provider but no longer makes new mortgage
advances. As at 31 May 2002, LGMSL had 3,000 customers and £127m of outstanding
mortgage advances. Northern Rock will maintain the Legal & General Bank name for
three months from the date of acquisition.

Following these disposals, Legal & General will continue to concentrate on
developing further its rapidly expanding core businesses of long term savings,
protection and general insurance.

The acquisition will enable Northern Rock to supplement its existing strong
organic growth by acquiring about £1.4bn of additional good quality residential
mortgage assets.

Once the sale has completed, Legal & General and Northern Rock intend to
establish a new distribution agreement for retail deposits and residential
mortgage products. Legal & General will take advantage of Northern Rock's cost
efficient manufacturing capability to offer targeted mortgage and retail deposit
products, manufactured by Northern Rock, to Legal & General's customer and agent
networks under the Legal & General brand. The distribution agreement will enable
Northern Rock to obtain economic benefit from the manufacture and sale of
additional mortgage and retail savings products. Under this partnership, both
existing and new accounts will be managed as distinct Legal & General accounts
by Northern Rock.

Legal & General will continue, under its existing arrangement with Northern
Rock, to sell its long term savings and protection products to Northern Rock
customers.

Legal & General Group Chief Executive David Prosser said: 'While Legal & General
Bank has been innovative and successful, it is operating in a crowded and
extremely competitive sector. Given this environment, we could not ignore a fair
offer for our banking subsidiaries particularly as our focus is now on our
growing savings and protection businesses. Our new distribution agreement will
ensure that Legal & General customers continue to have access to a competitive
range of mortgage and retail savings products from one of the UK's most
innovative and cost effective providers.'

Northern Rock Chief Executive Adam Applegarth said: 'This is an attractive deal
for us. We have been seeking opportunities to augment our business by buying
high quality mortgage books, hence our reason for approaching Legal & General.
As a result of this deal Northern Rock will be acquiring a funded, low risk,
high performing mortgage book at a fair premium of £36m above net asset value.'

Applegarth added: 'An important part of this arrangement is that we intend to
set up an additional branded product relationship with Legal & General to
originate future mortgage and retail deposit business.'



Enquiries to:


NORTHERN ROCK                                                LEGAL & GENERAL
Investors:
David Noble, Director of Institutional Relations             Peter Horsman, Head of Investor Relations
Tel: [phone]                                           Tel: [phone]
e-mail:     [e-mail]                   e-mail: [e-mail]

Media:
Tony Armstrong, Director of Corporate Relations              John Morgan, Head of Public Relations
Tel: [phone]                                           Tel: [phone]
e-mail:     [e-mail]                e-mail: [e-mail]

James Murgatroyd, Finsbury                                   Anthony Carlisle, Citigate Dewe Rogerson
Tel: [phone]                                           Tel: [phone]
e-mail: [e-mail]                        e-mail: [e-mail]







Notes:

 1. The purchase will be funded by Northern Rock from existing resources.
 2. LGB is owned by the long term fund of Legal & General Assurance Society Ltd.
    The premium over net assets will augment the admissible free assets of that
    fund.
 3. LGB is a subsidiary of Legal & General Bank Holdings - a subsidiary of Legal
    & General Assurance Society Ltd. The ultimate holding company of Legal &
    General Assurance Society Ltd is Legal & General Group Plc.
 4. LGMSL is a subsidiary of Legal & General Assurance Society Ltd.
 5. Legal & General's mortgage, loan and deposit customers are being sent letters
    today describing the new arrangement.
 6. LGB's 160 staff based in the company's Cardiff location will be offered
    alternative roles within Legal & General.
 7. Northern Rock has been an appointed representative of Legal & General
    Assurance Society Ltd for regulated investment products since 1989.
 8. Northern Rock is a representative only of the Legal & General marketing
    group, members of which are regulated by the Financial Services Authority,
    for the purposes of making introductions to other representatives for
    recommending, advising on and selling life assurance and investment products
    bearing Legal & General's name.


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