Sale of Northern Rock Plc to Virgin Money

Mark Hoban Excerpts

Tuesday 28th February 2012 Written Statements

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

On 17 November 2011, the Chancellor announced the sale of Northern Rock plc to Virgin Money. The transaction completed on 1 January 2012, following approval from the Financial Services Authority and receipt of European Commission merger clearance.

Today, UK Financial Investments Ltd (UKFI) has published a document setting out the background to and rationale for the decision to return Northern Rock plc to the private sector through its sale to Virgin Money.

The publication includes information regarding UKFI’s assessment of the Virgin Money bid against a full range of options to return Northern Rock plc to the private sector, including remutualisation. UKFI and Northern Rock plc received independent corporate finance advice from Deutsche Bank. Other information includes background on the sale process and the timing of the sale.

The publication also includes an assessment of the expected overall taxpayer returns from the Government’s intervention in the former Northern Rock which amounts to a positive net cash return. The Government provided £37 billion of funding into the two companies¹ that comprise the former Northern Rock and the return of cash from these companies to Government (excluding tax proceeds) is expected to total between £46 billion and £48 billion.

Copies of this publication have been deposited in the Libraries of both Houses.

¹The former Northern Rock was split into two entities on 1 January 2010: Northern Rock plc, a mortgage and savings bank; and Northern Rock (Asset Management) plc, the remaining closed mortgage book.