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Northern Rock, the taxpayer owned bank, has been sold to Virgin Money. The sale will expand Sir Richard Branson’s empire even further. The bank has 75 branches nationwide and one million customers with a total of £14 billion in mortgages and £16 billion in savings. When Northern Rock was nationalised it was divided into two formats, Northern Rock plc and Northern Rock (Asset Managment). Northern Rock plc will be rebranded as Virgin Money. Sir Richard Branson has been bidding for Northern Rock for four years, ever since it fell into the hands of the public following the banking crisis of 2008. Sir Richard Branson, Founder of the Virgin Group said; "Banking in the UK needs some fresh ideas and an injection of new competition. I'm delighted we will get the chance to work with the loyal staff of Northern Rock to create a new force in the market.” It’s no surprise he is delighted. Virgin appears to be getting a good deal from the acquisition, paying significantly less than the £1.4 billion of taxpayers’ money that was used to bail out the bank a few years ago. It’s estimated that the sale of the bank will see taxpayers take a loss of £400 million, the equivalent of £13 per tax paying person. However, Virgin has agreed certain T&Cs as the say a further £150 million will be paid in the ‘form of a capital instrument’. An additional cash consideration of between £50-£80 million will also be paid in the future over the next five years, based on profitable sales.
Jayne-Anne Gadhia, Chief Executive Officer at Virgin Money, commented; "We plan to create a major new competitor in UK retail banking as we bring together Northern Rock and Virgin Money at the beginning of 2012.” “The two businesses complement each other well and together they will create a strong bank with over 4 million customers. It is the outstanding fit between the two businesses that will allow us to create a strong, stable, growing and profitable business for the future.” Compare bank accounts with Money Expert.
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