Thu, 17 Nov 2011 | BUSINESS SALE
Virgin Money is going to buy Northern Rock plc for £747 million from its present owner, the government. The transaction is due to complete on 1 January 2012.
In addition to this amount, Virgin Money is due to pay a further £50 million within six months and then another £150 million.
When the government took control of the bank in 2008, after its near failure at the start of the credit crunch, it divided the bank into Northern Rock plc and Northern Rock (Asset Management), where its debt is held.
There are no plans for a sale of Northern Rock (Asset Management), which owes the Treasury £21 billion - the money that was pumped into the old Northern Rock bank back in 2008.
Virgin Money is expected to set up a new headquarters in Newcastle, where Northern Rock is based. It has also promised not to make any additional compulsory redundancies for at least three years.
“The sale of Northern Rock to Virgin Money is an important first step in getting the British taxpayer out of the business of owning banks,” Chancellor George Osborne said to the BBC. “It represents value for money, will increase choice on the High Street for customers, and safeguard jobs in the North East.”
Northern Rock executive chairman Ron Sandler commented: “The return of Northern Rock to the private sector has always been one of our key objectives.”
“It is a very positive outcome for the company following a significant restructuring process.”
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