Virgin Money is to repay the £150 million financing package it got when it purchased failed Northern Rock two years ago.
The run on Northern Rock in August 2007 was the start of the financial crisis in Britain. The Newcastle-based lender was nationalised in February 2008 with a £1.4bn bail-out.
Tax payers were out of pocket by more than £400m on the sale when Virgin purchased it for £747 million in cash (!) and £150m in Tier 1 notes. Six months after the sale Virgin Money paid a further £73m.
UK Financial Instruments, the body acting for the Treasury to represent the state’s interests in bailed-out banks, said the transaction was “value for money for the taxpayer” and that “the proceeds will reduce the national debt”.
It added that so far £975m has been received from the sale of Northern Rock and perhaps a further £50m if Virgin Money is floated or sold before the end of 2016.
In its last annual results, Virgin Money reported an underlying profit of £53.4m, after a loss of £2.5m in 2012. It announced plans to recruit a further 200 staff.
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