Northern Rock sell-off nets extra £538m for taxpayers

The UK will make an additional £538m from the sale of failed lender Northern Rock after a new agreement with Richard Branson's Virgin Money, UKFI has said.

UKFI, the body managing the government's stakes in bailed-out banks, said Virgin had bought £465m of Northern Rock's mortgage assets.

It had also agreed to pay an extra £73m in cash for Northern Rock.

UKFI said the original deal for £747m, agreed in January, did not reflect the true value of Northern Rock's assets.

Virgin Money has bought the mortgage assets at their face value.

Keith Morgan, head of wholly owned investments at UKFI, said the transactions "created and protected value for the taxpayer as shareholder."

UKFI has estimated that the government could ultimately receive more than £1bn from the Northern Rock sale, but that still represents a loss on the £1.4bn pumped into the lender by the government.

Northern Rock was the fifth-biggest provider of home loans before its collapse.

But the group was starved of funding after banks stopped lending to each other in the 2007 credit crisis, triggering the first run on a British bank in decades and prompting the government to step in with emergency support.