Government sells Northern Rock to Virgin Money

The government has agreed to sell Northern Rock, the failed mortgage lender it nationalised in 2008, to Virgin Money, the banking arm of Richard Branson's Virgin empire.

"The sale of Northern Rock to Virgin Money is an important first step in getting the taxpayer out of the business of owning banks," Chancellor George Osborne said in a statement on Thursday.

Under the terms of the deal the government will receive £747m in cash on the closing of the sale, rising to as much as 1 billion pounds in total in the future.

Northern Rock, a former mutual that used cheap wholesale credit to grow aggressively in the mortgage market, was nationalised in early 2008 after banks abruptly stopped lending to each other in the credit crisis.