Britain has agreed to sell nationalised lender Northern Rock to Virgin Money, the banking arm of Richard Branson's Virgin empire, in a loss-making deal that marks the start of the government's exit from banks it bailed out in the 2008 crisis. The disposal, five months after British finance minister George Osborne formally put Northern Rock up for sale, will fetch between 747 million pounds and 1 billion pounds ($1.2 billion - $1.6 billion), Britain's Treasury said on Thursday.
That represents a loss of at least 400 million pounds on the 1.4 billion pounds in equity pumped into the lender by taxpayers. "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," Osborne said in a statement.
Virgin Money, partly backed by US private equity tycoon Wilbur Ross, will scrap the Northern Rock brand next year, and aims to float the combined business as early as 2014, Chief Executive Jayne-Anne Gadhia told Reuters. Virgin Money saw off competition from rival bidders including NBNK, a take-over vehicle run by former Northern Rock boss Gary Hoffman, which aims to create a new bank by buying assets from bigger operators who are scaling back. UK Financial Investments (UKFI), the body which manages the government's stakes in bailed-out banks, said it had backed Virgin Money's bid because it offered the best deal to taxpayers.