Northern Rock is being sold to Virgin Money for £747m, the government has announced.

The bank was nationalised in 2008 following its near collapse at the onset of the global credit crisis.

The government subsequently split the bank into two, Northern Rock plc, and Northern Rock (Asset Management), into which was placed its bad debt.

Virgin is buying Northern Rock plc and has pledged no additional compulsory redundancies for at least three years.

‘Safeguards jobs’

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 sale of Northern Rock plc is expected to be completed on 1 January 2012.

The government said it had no plans to sell Northern Rock (Asset Management), which still owes the Treasury £21bn – the amount that was injected into the old Northern Rock bank in the wake of its near collapse.

Virgin Money has pledged to establish a new headquarters in Newcastle, where Northern Rock is based.

In addition to paying £747m on completion of the sale, the government said Virgin Money was “expected” to pay an additional £50m within six months, and then a further £150m.

If Virgin Money sells or lists Northern Rock on the stock exchange in the next five years, it will have to pay the government an additional £50m to £80m.

BBC