UK sells Northern Rock to Virgin despite protest

LONDON Sun Jan 1, 2012 12:32pm GMT

People pass a branch of Northern Rock bank in Newcastle, northern England November 17, 2011. REUTERS/Nigel Roddis

People pass a branch of Northern Rock bank in Newcastle, northern England November 17, 2011.

Credit: Reuters/Nigel Roddis

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LONDON (Reuters) - Virgin Money completed its acquisition of bailed out Northern Rock on Sunday, despite calls for the sale to be delayed while the national auditor investigates whether the deal is good value for money.

The government agreed in November to sell Northern Rock to Virgin Money -- the banking arm of billionaire Richard Branson's Virgin Group -- for between 747 million pounds and 1 billion pounds.

The deal does not recoup all of the 1.4 billion pounds spent by the authorities to keep the bank afloat during the credit crisis.

The Labour Party wanted the deal to be put on hold while the National Audit Office investigates the sale.

Northern Rock, the victim of the first run on a British bank in many decades, was nationalised three years ago after nearly collapsing during the credit crunch.

David Clementi, a former deputy governor of the Bank of England, will be chairman of the new banking group and Jayne-Anne Gadhia will be its chief executive, Virgin said, announcing the deal's completion.

"We have a unique opportunity to build a new kind of bank in the UK, a bank that will aim to make a real difference and provide enhanced competition in UK retail banking," Gadhia said.

(Reporting by Matt Falloon; Editing by Ruth Pitchford)

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