Treasury to Sell Northern Rock for £747m
The nationalised bank Northern Rock is to be sold imminently by the government, in an initial £747m deal, it was announced today.
Virgin Money’s purchase of Northern Rock will simultaneously introduce a new competitor to the UK retail banking sector as well as reduce the number of businesses in the hands of public-ownership.
In 2009 – two years after the government stepped in to save the bank from complete collapse and at the same time preserve the savings of individual members of the British public – Northern Rock was split in to two, and with this sale the government retains the heavily indebted Asset Management arm of the bank.
The new owners have reassured staff at the bank that no further compulsory redundancies will be made, while a new head office will be opened in Newcastle, and so reaffirming its north-eastern ties.
Chancellor George Osbourne, on today’s announcement, 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 sale of the most profitable branch of the bank at £747m is ‘expected’ to bring in an additional £50m within six months of completion, plus a further £150m in the form of a capital instrument and - should it be resold in the next five years – an extra £50-80m. It goes some way in reclaiming the £1.4bn of tax payer money that had originally been invested in the bank.
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