Northern Rock purchased by Virgin Money
Government-owned bank Northern Rock has been bought by Virgin Money for £747 million, it was announced today.
The struggling bank was nationalised in 2008 following the global credit crunch. The deal between Virgin and the Treasury will be finalised in January 2012.
Virgin Money already has three million customers, which will grow to four million with the acquisition of Northern Rock. The enlarged group will be strongly capitalised.
"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,” said Jayne-Anne Gadhia, Chief Executive Officer at Virgin Money.
“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. We are aiming to build a true banking alternative for the UK consumer, one centered on our ambition to make everyone better off.”
As well as one million extra customers, the deal sees Virgin Money acquire 75 Northern Rock branches, a £14 billion mortgage book, and a £16 billion retail deposit book.
The group will also acquire all 2,500 of Northern Rock’s employees. Virgin Money has promised no compulsory job cuts for three years.
"The announcement of the sale of Northern Rock to Virgin Money is a bittersweet moment. On the plus side de-nationalising this bank is a positive step, however we would have welcomed Northern Rock's return to the mutual sector after 14 years' absence,” said Adrian Coles, Director-General of the Building Societies Association.
Sir Richard Branson, founder of the Virgin Group said: “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. Virgin has a history of entering new sectors to improve service and provide value for customers. We plan to do the same in banking.”