By Maximilian Clarke

The publicly-owned Northern Rock has been sold to Virgin Money in a £747m deal that will lead to increased competition in the banking centre.

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. It will help increase diversity in the retail banking sector as Virgin Money seeks to innovate and expand into new market segments.

"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,” commented Chancellor George Osborne. “It represents value for money; will increase choice on the high street for customers; and safeguards jobs in the North East.”

The Government will receive £747 million in cash on closing of the sale, with the potential in the future to receive over one billion pounds in total.

The sale will not affect current customers of Northern Rock, who will carry on their banking as usual. They do not need to take any action and can continue to operate their accounts and contact Northern Rock as they do now. There are no changes to their terms and conditions as a result of this announcement.

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