Northern Rock, the bank that is currently owned by Her Majesty's Treasury following a state buy-out, is set to be purchased by Virgin Money.
The deal is subject to regulatory and EU merger approval but completion of the transaction is scheduled for 1 January 2012.
Included in the sale are 75 Northern Rock branches, one million customers, a mortgage book of around £14 billion, a retail deposit book of about £16 billion and 2,100 employees.
According to the government, the deal, which is to create a significant new competitor in UK retail banking, will be good for tax payers. Indeed, the government will receive £747 million in cash on closing the sale; but eventually the deal is expected to bring in over £1 billion.
Jayne-Anne Gadhia, chief executive at Virgin Money, commented: “We plan to create a major new competitor in UK retail banking as we bring together Northern Rock and Virgin Money at the beginning of 2012.
“The two businesses complement each other well and together they will create a strong bank with over 4 million customers.”
She added that the company aims to “build a true banking alternative for the UK consumer, one centred around our ambition to make everyone better off”.
