July 25, 2014 / 1:20 PM / 4 years ago

British government raises 155 million stg from Virgin Money note sale

LONDON, July 25 (Reuters) - Britain’s government said on Friday it had raised 154.5 million pounds ($262 million) from the sale of corporate debt issued by Virgin Money, which the bank used as part payment for nationalised lender Northern Rock in 2012.

Virgin Money will repurchase its Tier 1 capital notes from the government, which will use the proceeds to help pay down the national debt, the finance ministry said on Friday.

“It is another step in repairing the banks, in reducing our national debt and in getting the taxpayers’ money back,” said junior finance minister Andrea Leadsom.

Virgin Money, the banking arm of Richard Branson’s Virgin Group, agreed to buy Northern Rock from the government for an initial fee of 747 million pounds in November 2011.

It followed that in 2012 with 150 million pounds of Tier 1 capital notes with an annual coupon of 10.5 percent.

The government’s UK Asset Resolution (UKAR) “bad bank” still holds the bad loans of failed lenders Northern Rock and Bradford & Bingley, which collapsed in 2008 as the financial crisis escalated.

UKAR said last month that it had repaid the government 10.4 billion pounds out of the 48.7 billion pounds it owes.

For a story from IFR on Virgin Money’s plans, see: ($1 = 0.5892 British pounds) (Reporting by Andy Bruce; Editing by Susan Fenton)

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