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Topics: Northern Rock
The Treasury has sold Northern Rock plc to a consortium led by Richard Branson's Virgin Money for £747m, at a £650m loss on the £1.4bn of capital it injected into the bank.
In a statement, Northern Rock said the government will receive £747m in cash on closing of the deal, expected to completed by the end of the year, with the potential in the future to receive a further £360m to bring the sale to one billion pounds in total.
IFAonline understands American investor Wilbur Ross of WL Ross & Co is also part of the purchase consortium. Ross is known for restructuring failed companies.
The sale is only for the the savings and mortgages part of the business, not the 'bad bank' investment arm.
Virgin Money has committed to no further compulsory redundancies beyond those already announced by Northern Rock, for at least three years
The operational headquarters of the combined business will be based in Newcastle.
The total number of Northern Rock branches will be retained and extended in due course as business growth allows.
The former Northern Rock business was taken into temporary public ownership in February 2008. Following the restructure of the former business, the new Northern Rock plc was created as a savings and mortgage bank, on 1 January 2010.
One of the key conditions of state aid was the return of the company to private ownership.
The whole enlarged group will be branded Virgin Money following completion of the sale.
For customers, it is business as usual, Northern Rock said.
Ron Sandler, executive chairman of Northern Rock plc said the deal "delivered value to taxpayers".
"Today's announcement demonstrates the enormous progress that has been made at Northern Rock, which is great testimony to the commitment and spirit of the people who work here.
"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.
"It is a very positive outcome for the company following a significant restructuring process."
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Emperor's new clothes
Is it me. Touted as a 'new lender' but we are losing N Rock - an excellent lender. We are not moving forward. A new lender would be 'in addition to'. Why sell now when N Rock is expected to be in profit in 2012? Oh I forgot, probably some politician setting themselves up for a future juicy board position!
Posted by: Mike
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Do what ?
Let me understand this, Ron Sandler, executive chairman of Northern Rock plc said the deal "delivered value to taxpayers". The "deal", once it's gone through,leaves us, the taxpayer with the toxic bank -AND- a loss of £650 MILLION pounds sterling on the money the Treasury injected into Nothern Rock ...is that correct ??
Posted by: Joe Public