Date: Thursday 17 Nov 2011
Virgin Money is to buy the state owned bank Northern Rock for £747m from the UK government.
The sale takes place after the previous Labour administration was forced to take Northern Rock into state ownership in 2008, following the bank's near collapse in 2007.
Virgin Money has agreed that there will be no further voluntary redundancies at Northern Rock for three years after completion of the sale.
The terms of the deal also mean Virgin Money must relocate its operational headquarters to Newcastle.
Commenting on the sale, the Chancellor George Osborne said: "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. It represents value for money; will increase choice on the high street for customers; and safeguards jobs in the North East."
The Government will initially receive £747m but that will be topped up by around £50m in cash six months after the sale is complete and an additional £150m in what’s described as a “capital instrument” probably a share in the new entity or possibly a bond.
If Virgin Money publically list Northern Rock in the next five years, or simply sell it on, the government will receive a further £50-80m
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