Osborne, Rt. Hon George

United Kingdom: HM Treasury

Yale University

Press releaseChancellor announces saleof Northern Rock plcThe Government is selling Northern Rockplc to Virgin Money.From:PublishedHM Treasury (/government/organisations/hm-treasury) and The Rt Hon George Osborne(/government/people/george-osborne)17 November 2011This was published under the 2010 to 2015Conservative and Liberal Democrat coalitiongovernment GOV.UKRegister to vote (/register-to-vote)  Register by 18 June to vote in the GeneralElection on 4 July.Home Business and industry Financial services5/30/24, 3:42 PM Chancellor announces sale of Northern Rock plc - GOV.UKhttps://www.gov.uk/government/news/chancellor-announces-sale-of-northern-rock-plc 1/5The Government is selling Northern Rock plc to VirginMoney. It represents a significant step in returningpublic sector stakes in banks to the privatesector. The sale is in the best interests of thetaxpayer, secures the long-term future of thecompany and will increase competition in the bankingsector. This is part of the Government’s widerstrategy for the banking sector with safer ring-fenced banks and more competition for customers.The combined business of Northern Rock and VirginMoney will establish a new competitor in the UK retailbanking sector and, in doing so, will lead to anincrease in choice for high-street customers. It willhelp increase diversity in the retail banking sector asVirgin Money seeks to innovate and expand into newmarket segments.The Government will receive £747 million in cash onclosing of the sale, with the potential in the future toreceive over one billion pounds in total.The sale values the important local heritage of thecompany and recognises the importance of NorthernRock to the North East economy. Virgin Money hascommitted to:No further compulsory redundancies, beyond thosealready announced, for at least three years fromcompletion;Retaining and, over time, expanding the totalnumber of branches;Extending support for the Northern Rock charitablefoundation for a further year; and5/30/24, 3:42 PM Chancellor announces sale of Northern Rock plc - GOV.UKhttps://www.gov.uk/government/news/chancellor-announces-sale-of-northern-rock-plc 2/5“Making Newcastle the operational HQ for VirginMoney.The decision to proceed with a sale was based onadvice from UK Financial Investments (UKFI) andtheir independent advisers, having considered all bidsand other relevant options.The sale will not affect current customers of NorthernRock, who will carry on their banking as usual. Theydo not need to take any action and can continue tooperate their accounts and contact Northern Rock asthey do now. There are no changes to their terms andconditions as a result of this announcement.The Chancellor of the Exchequer, the Rt Hon GeorgeOsborne MP said:The sale of Northern Rock to Virgin Money isan important first step in getting the Britishtaxpayer out of the business of owning banks. Itrepresents value for money; will increasechoice on the high street for customers; andsafeguards jobs in the North East.”Notes for editors1. On 22 February 2008, by an order made under theBanking (Special Provisions) Act 2008, the sharesof Northern Rock plc were transferred intotemporary public ownership.2. On 1 January 2010 Northern Rock was split intotwo separate entities: Northern Rock plc, a newsavings and mortgage bank authorised as amortgage lender by the FSA; and Northern Rock(Asset Management) plc.3. In his Mansion House speech on 15 June 2011, theChancellor announced the decision to put NorthernRock plc up for sale (http://www.hm-treasury.gov.uk/press_58_11.htm). 4. In line with EC state aid requirements the saleprocess was conducted in an open, transparentand non-discriminatory manner.5/30/24, 3:42 PM Chancellor announces sale of Northern Rock plc - GOV.UKhttps://www.gov.uk/government/news/chancellor-announces-sale-of-northern-rock-plc 3/55. Deutsche Bank was appointed as a joint adviser toboth UKFI and Northern Rock for the sale process.6. The Government is today announcing the sale ofNorthern Rock plc to Virgin Money. The dealmaximises value for the taxpayer, who will receive£747 million in cash on closing, plus an expectedcirca £50 million of cash within six months ofcompletion. A further £150m will be paid in the formof a capital instrument and an additional cashconsideration of £50-80 million will be paid upon afuture profitable IPO or sale in the next five years. 7. The sale is expected to be completed on 1 January2012, pending EU merger clearance and approvalby the Financial Services Authority.8. As part of the sale agreement, Virgin Money havemade a number of commitments, including:No further compulsory redundancies other thanthose already announced by Northern Rock, forat least three years from completion; and tomaintaining the number of branches currentlyoperated by Northern Rock.Making Newcastle the operation headquartersfor the combined business.Maintaining and extending support for theNorthern Rock Foundation for a further year.9. The Government has no plans to sell NorthernRock Asset Management. In October 2010Northern Rock (Asset Management) plc andBradford & Bingley were integrated under a singleholding company, UK Asset Resolution (UKAR).UKAR’s has implemented a business plan thataims to wind down the institutions in a way thatmaximises taxpayer value for money and repayscombined debt to the taxpayer of around £50bn.10. The Government’s investments in financialinstitutions are managed at arm’s-length by UKFinancial Investments Ltd (UKFI). UKFI’s mandaterequires it to achieve value for money for the taxpayer and pay due regard to financial stability andcompetition. The full range of disposal options wasevaluated by UKFI including returning NorthernRock to the mutual sector by combining with anexisting mutual or through a standalone5/30/24, 3:42 PM Chancellor announces sale of Northern Rock plc - GOV.UKhttps://www.gov.uk/government/news/chancellor-announces-sale-of-northern-rock-plc 4/5remutualisation of the company. Furtherinformation can be found here:http://www.ukfi.co.uk/ (http://www.ukfi.co.uk/)Non-media enquiries should be addressed to theTreasury Correspondence and Enquiry Unit on 0207270 4558 or by e-mail to public.enquiries@hm-treasury.gov.ukMedia enquiries should be addressed to the TreasuryPress Office on 020 7270 5238.Published 17 November 2011Explore the topicFinancial services (/business-and-industry/financial-services)All content is available under the Open Government Licencev3.0, except where otherwise stated © Crown copyright5/30/24, 3:42 PM Chancellor announces sale of Northern Rock plc - GOV.UKhttps://www.gov.uk/government/news/chancellor-announces-sale-of-northern-rock-plc 5/5

Chancellor announces sale of Northern Rock plc

https://elischolar.library.yale.edu/context/ypfs-documents2/article/4825/viewcontent/HM_20Treasury_2011_Chancellor_20announces_20sale_20of_20Northern_20Rock_20plc.pdf

Chancellor announces sale of Northern Rock plc

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