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Richard Branson snaps up Northern Rock

Northern Rock has been sold to Richard Branson’s Virgin Money in a deal worth £747m, which could rise to more than £1bn.

The sale was “in the best interests of the taxpayer, secures the long-term future of the company and will increase competition in the banking sector”, according to the Treasury. It does not include “bad bank” Northern Rock Asset Management.

Chancellor George Osborne says: “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.”

According to the Treasury, Virgin Money has agreed to make no further compulsory redundancies, besides those already announced, for at least three years from completion of the deal.

The new owners will retain and expand the total number of branches, extend support for the Northern Rock charitable foundation for another year, and make Newcastle its operational headquarters.

Ron Sandler, executive chairman of Northern Rock, says: “The return of Northern Rock to the private sector has always been one of our key objectives.

“We said that this would be done at the right time and when there was a proposition in the best interests of taxpayers and other stakeholders.”

The Government says the sale will not affect current customers of Northern Rock.

The Treasury expects around £50m of cash within six months of completion of the deal.

According to the terms of the deal, a further £150m will be paid in a capital instrument and an additional cash consideration of £50-80m could be paid upon a future profitable initial public offering or sale in the next five years.


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There are 13 comments at the moment, we would love to hear your opinion too.

  1. Its music to my ears Richard….Hope he revolutionises an industry destroying itself by being innovative and customer focussed.

  2. 3 billion to bail NR out. All bad debt kept. How is this good news for the UK taxpayer?

  3. Bob Riach Riach IFA 17th November 2011 at 9:36 am

    No virgins in Newcastle

  4. Beardie has been trying to get this for ages, he has bought it on the cheap, forget the headline £750m figure, he wont pay that. It will be run for a few years under the Virgin brand, then sold off and ultimatley wither.

  5. I know what Derek means….and what has been destroying the banks….their style of innovation and customer focus may well have been the problem!! Virgin apply refreshing thinking to all that they have done to date.

  6. Taxpayer@09:33

    Agreed. Branson may be innovative and introduce new ideas to the industry. But he is a businessman. He has taken an opportunity. Good news for him maybe.

    There is no good news to the taxpayer following the crisis of Northern Rock and the crisis of 2008

  7. Agree with Taxpayer and Nathan Stevens.

    I really fail to see how this is good news for the taxpayer as Mr Osborne wants us to believe.

    The taxpayer has lost money on this deal and no doubt Mr Branson will make a pretty penny out of it.

    Why did they need to sell it now when just about anything and everything is depressed. This could well end up being Mr Osborne’s folly in the same way as Mr Brown did when he sold our gold at rock bottom prices.

    I hope the TSC looks into this asap.

  8. Virgin All Share Tracker, growth over 10 years 3.70% (average annual growth rate 0.36% pa); All Share Index growth over 10 years 4.80%. As an IFA in 1995 I remember those adverts, how you don’t need an IFA, how you don’t need to pay commission, just trust Richard and his smiling face…

  9. Ken Durkin | 17 Nov 2011 10:39 am

    Ken I’m with you on that one ……. remember it very well!

  10. shocked to be frank 17th November 2011 at 4:50 pm

    How can Richard Branson snap up northern rock if virgin mobile (HIS BRAND) cant even provide good customer service. Ridiculous really.

  11. The taxpayers in UK had to bail out the Northern Rock but when it came to selling it off, the taxpayer had no say in the matter as to when it should be sold and to whom. Branson and his virgin empire will not pay the full sale price and although promises have been made to retain jobs, location etc. I am certain that down the line jobs will be affected and as he owns the nothern rock, no one will be able to do anything about it. Branson is a business man, and he has done this ‘to make money’ simple as that, not to help the taxpayers that’s for sure. I have money in Northern Rock but I will be closing my account prior to the takeover and suggest others do the same.

  12. Let’s not forget that Northern Rock is still losing money. So do the Government keep bailing it out or do they cut their losses and sell now?

    Whilst the deal may not look like good value for money from a tax payer’s point of view, allowing Northern Rock to fail in the first place would undoubtedly have cost considerably more.

    When money is tight and a large number of people in the public sector are being made redundant, it wouldn’t be hard to justify spending more millions on proping up a loss making bank when there is an offer on the table.

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