Don't miss

Replay


LATEST SHOWS

EYE ON AFRICA

Donors pledge millions at Uganda refugee summit

Read more

MEDIAWATCH

Depp plumbs depths of bad taste

Read more

THE WORLD THIS WEEK

France's new frontman, America's absent center, May's Brexit gambit, Saudi royal reshuffle, after Mosul & Raqqa fall

Read more

REVISITED

Senegal’s Casamance hopes for new era of peace

Read more

THE INTERVIEW

FARC disarmament a 'historic day' for Colombia, says president

Read more

FASHION

Behind the scenes at Dior’s star-studded desert show

Read more

ENCORE!

Colombia comes to France

Read more

#THE 51%

The last taboo: Helping women and girls. Period.

Read more

DOWN TO EARTH

Who benefits when the ice caps melt?

Read more

Business

British government sells failed Northern Rock bank to Virgin

Text by News Wires

Latest update : 2011-11-17

Britain’s finance ministry announced Thursday it had agreed to sell Northern Rock, a failed mortgage lender that was nationalised during the financial crisis in 2008, at a major loss to Virgin Money.

REUTERS - The British government has agreed to sell Northern Rock, the failed mortgage lender it nationalised in 2008, to Virgin Money, the banking arm of Richard Branson’s Virgin empire.

Northern Rock, the first banking asset bought by the government during the financial crisis to be offloaded, will fetch between 747 million and 1 billion pounds ($1.2 billion - $1.6 billion) in cash, the finance ministry said on Thursday.
 
Even at the upper end that would mean a 400 million pound loss on the 1.4 billion pounds in equity pumped into the lender by taxpayers at the height of the credit crunch.
 
“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,” Chancellor of the Exchequer George Osborne said in a statement on Thursday.
 
The combination of Northern Rock and Virgin Money should also increase competition in British retail banking, challenging the dominance of HSBC, Barclays, Lloyds Banking Group, Santander and Royal Bank of Scotland, the UK Treasury said.
 
Under the deal, Virgin Money has pledged not to make any further compulsory redundancies from the combined bank, and to maintain Northern Rock’s existing branch network.
 
Northern Rock, a former mutual that used cheap wholesale credit to grow aggressively in the British mortgage market, was nationalised in early 2008 after banks abruptly stopped lending to each other in the credit crisis, starving it of funding.
 
Virgin Money was one of several companies that expressed interest in buying Northern Rock during a failed attempt to sell the bank in late 2007.
 
The British government still holds an 83 percent stake in RBS and 41 percent of Lloyds, a legacy of its efforts to prop up the banking sector during the financial meltdown.

 

Date created : 2011-11-17

  • UK

    London’s ‘Occupy’ protesters threatened with eviction

    Read more

  • UNITED KINGDOM

    UK unemployment hits 15-year high

    Read more

  • UK

    UK students march on London in new fees protest

    Read more

COMMENT(S)