UK Government to sell Northern Rock to Virgin Money

The British government has agreed to sell Northern Rock to Virgin Money, the banking arm of Richard Branson's Virgin empire. The failed mortgage lender was nationalised in 2008 after it crashed in 2007, starting the UK Banking crisis. Northern Rock, a former mutual used cheap wholesale credit to achieve a massive growth in the British mortgage market, they were at the forefront of sub-prime lending institutions and fell very fast when banks stopped lending to each other.

"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,"  George Osborne (UK Chancellor of the Exchequer) said in a statement on Thursday (17th November 2011).

Under the terms of the deal the government will get £747million in cash on the closing of the sale, 1 January 2012. Virgin Money will  have to pay another £200million in staged payments.