UK Treasury flogs Northern Rock to flirty Virgin
Nationalised bank offloaded in £747m cash deal
Northern Rock was a major victim of 2008's credit crunch - but it survived with help from the then Labour government, which nationalised the Newcastle-based money outfit. Now the Tory-LibDem coalition is shoving it back into the corporate world.
Step forward bearded biz baron Sir Richard Branson, whose Virgin Money company has agreed a cash deal of £747m to take Northern Rock away from the command of
taxpayers the Treasury.
"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," thundered thin-lipped Chancellor of Exchequer George Osborne.
"It represents value for money, will increase choice on the high street for customers, and safeguards jobs in the North East,” he added.
As part of the agreement, Virgin Money is not expected to make any compulsory redundancies for three years beyond the sackings already announced by Northern Rock. The deal also means Virgin Money will plonk its HQ in Newcastle.
As for the £50bn owed to taxpayers, who bailed out Northern Rock, the government assures us that the debt will continue to be repaid: this financial chicanery will be managed by the rather blandly named UK Asset Resolution Ltd. On top of the £747m deal, at least an extra £250m is promised to the government once the sale is done and dusted.
Terms and conditions for existing customers of the bank will remain the same, the government added.
In October 2007, Branson's Virgin Group was in talks to purchase Northern Rock after it was bailed out by the Bank of England. But that bid never materialised into a buyout. Instead Northern Rock was nationalised.
The Bank of England Governor Mervyn King blamed the 2008 Northern Rock crisis, which prompted the first cash run on a UK bank for more than 140 years, on then-chancellor Alistair Darling for failing to support a takeover bid. ®
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