Virgin Money is to buy the state owned bank Northern Rock for £747m from the UK government.
The sale takes place after the previous Labour administration was forced to take Northern Rock into state ownership in 2008, following the bank's near collapse in 2007.
Virgin Money has agreed that there will be no further voluntary redundancies at Northern Rock for three years after completion of the sale.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The terms of the deal also mean Virgin Money must relocate its operational headquarters to Newcastle.
Commenting on the sale, the Chancellor George Osborne said: "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. It represents value for money; will increase choice on the high street for customers; and safeguards jobs in the North East."
The Government will initially receive £747m but that will be topped up by around £50m in cash six months after the sale is complete and an additional £150m in what's described as a "capital instrument" probably a share in the new entity or possibly a bond.
If Virgin Money publically list Northern Rock in the next five years, or simply sell it on, the government will receive a further £50-80m
BS
-
Car tax rules are changing: what are the new vehicle excise duty rates?The rules around vehicle excise duty are changing this April. What are they, and how are they going to affect you?
-
Most affordable cities for single homebuyers revealedBuying a home by yourself? Analysis by Zoopla reveals the most affordable cities in the UK
