British government sells Northern Rock to Virgin Money, logging loss on deal The British government, which nationalized Northern Rock during the financial crisis, agreed this week to sell the bank to Richard Branson's Virgin Money.

The newly announced agreement will result in a loss to British taxpayers, according to The New York Times. Virgin Money will purchase Northern Rock for $1.2 billion in cash. Total proceeds, however, could climb more than 20 percent higher if a number of certain conditions are met.

The British government paid roughly $2.2 billion to purchase Northern Rock at the height of the financial meltdown. The bank was on the cusp of insolvency, and required the capital infusion from the government. The deal represents the first such sale of banking assets that the British government acquired during the crisis.

The British government still owns a stake in the Royal Bank of Scotland and Lloyds Banking Group, which officials said they are still hopeful to sell at a profit.

"The Northern Rock sale is a very good result for the government because losing the risk is better than going for profit," BGC Partners strategist Howard Wheeldon said. "But it was the relatively one for the government to get off its back. The real test is going to be R.B.S. and Lloyds."

The Washington Post reports the government was eager to reduce its stake in the mortgage lender, especially as some officials feared taxpayer losses could have climbed even higher over the coming year. Virgin Money promised it would not lay off workers to achieve business cost reductions, and Branson agreed to maintain the bank's full branch network for at least three years, further sweetening the deal for the government.

"It was clear to us that this was the best deal for the British taxpayer, we were getting more money back than any other deal on the table," Treasury head George Osborne affirmed.

Moreover, Osborne asserted the sale would help to increase the competitiveness of the U.K. banking sector, which is currently dominated by four large financial institutions.

Critics, however, argued that the loss of taxpayer money was tantamount to a betrayal of public confidence.

"I'm very concerned about whether we are getting really good value for the taxpayer," Conservative Party lawmaker Mark Field said.

The sale of Northern Rock includes 75 branches, 2,100 employees and 1 million customers, according to the Post.

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