Sunday, January 1, 2012
Today Virgin Money finalised a deal with the British Government to acquire the nationalised Newcastle upon Tyne-based bank Northern Rock for £747 million. During 2012, the bank will be rebranded as a Virgin company and the current Northern Rock customers will become customers of the enlarged Virgin Money.
The Northern Rock bank had been nationalised in 2008 following the revelation that the company had received emergency support from the UK Government. Northern Rock had required support due to its exposure during the subprime mortgage crisis in 2007. Sir Richard Branson’s Virgin Group had a bid for the bank rejected prior to the bank’s nationalisation. In 2010, while nationalised, the current high street bank Northern Rock plc was split from the ‘bad bank’, Northern Rock (Asset Management). Virgin have only purchased the ‘good bank’ of Northern Rock, not the asset management company.
The deal which could have additional payments to put the total value of the sale to over £1 billion had been first announced on 17 November 2011 and was criticised by some as not being a good enough deal for taxpayers. Opposition such as the Labour Party requested that the National Audit Office investigate the sale, and for it to be put on hold. By the beginning of 2012, the deal had been approved by the Financial Services Authority and the European Commission for merger clearance.
Jayne-Anne Gadhia will be Virgin Money’s CEO and former deputy governor of the Bank of England, Sir David Clementi, will be Chairman. Virgin have also pledged to maintain an operational headquarters in Newcastle upon Tyne as well as maintaining the current branches.