Britain sells Northern Rock bank to Virgin Money

Britain said on Thursday it will sell Northern Rock, which was nationalised in the global financial crisis, to Richard Branson's Virgin Money for £747 million ($1.18 billion, 872 million euros). "The Government is selling Northern Rock plc to Virgin Money. It represents a significant step in returning public sector stakes in banks to the private sector," the Treasury said in a statement, adding that the total sale amount could rise to more than £1.0 billion. "The sale is in the best interests of the taxpayer, secures the long-term future of the company and will increase competition in the banking sector." British finance minister George Osborne said the sale to Virgin Money represented "the best deal for the British taxpayer". The takeover of Northern Rock, which is based in the northeastern English city of Newcastle, is expected to be completed by the end of the year. The bank was taken into public ownership back in February 2008. The lender was last year split in two, forming a so-called "good bank" for its healthy businesses and a "bad bank" management company to wind down toxic assets. Only the "good" bank -- Northern Rock plc -- has been sold to Virgin. "The combined business of Northern Rock and Virgin Money will establish a new competitor in the UK retail banking sector and, in doing so, will lead to an increase in choice for high-street customers," the Treasury added Thursday. "It will help increase diversity in the retail banking sector as Virgin Money seeks to innovate and expand into new market segments." Virgin Money has committed to making no further compulsory redundancies at Northern Rock, for at least three years from completion of the deal. It also pledged to retain the branch network and expand it over time. Northern Rock was plunged into crisis in mid-September 2007 when its exposure to the credit crunch forced it to seek emergency assistance from the Bank of England, sparking the first run on a British bank in recent history.