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Virgin Money to pay £154.5 million to government and announces 200 new jobs


  • Virgin Money is raising a £160m Tier 1 capital instrument, the proceeds of which will be used to repay a financing package put in place by the Government at the time of the Northern Rock plc acquisition in January 2012
  • The Chancellor of the Exchequer, Rt. Hon. George Osborne MP visited Virgin Money’s offices in Newcastle today and welcomed the announcement of a further 200 new jobs
  • The visit coincided with the first phase of the rollout of the Virgin Essential Current Account available to customers in Scotland and Northern Ireland.

Virgin Money has announced today that it is repaying the Government £154.5m1. At the time of the acquisition of Northern Rock plc, HM Treasury received £747 million cash and £150m of Tier 1 Capital Notes on completion of the deal, plus a further £73 million cash six months later.

Jayne-Anne Gadhia, Chief Executive at Virgin Money said: “I am delighted to announce the repurchase of the Tier 1 Capital Notes from HM Treasury. The issue of the new Tier 1 Capital Notes marks Virgin Money’s inaugural access to the unsecured debt capital markets. Investor feedback was very positive and the transaction was comfortably oversubscribed representing a significant vote of confidence in Virgin Money. The support demonstrated by investors is a reflection of Virgin Money’s strong balance sheet, its conservative approach to capital and liquidity and the strong and profitable growth delivered in its core business.”

At a visit to Virgin Money’s operational headquarters in Gosforth, Newcastle upon Tyne, The Chancellor of the Exchequer, the Rt. Hon. George Osborne MP, congratulated Virgin Money on its progress since acquiring Northern Rock plc, and welcomed the news that Virgin Money will have created 200 jobs during the course of 2014, 120 of which will be in the North East.

The Chancellor said: “A key part of the government’s long term economic plan is to increase competition in Britain’s banking system so that consumers have more choice and get a better deal. This includes wide-ranging action to support new and smaller banks, so it’s fantastic to see a market challenger like Virgin Money growing, launching new and different products, and creating more jobs here in the North East.”

Virgin Money acquired Northern Rock plc in January 2012 and since then has made its mark in improving competition in UK retail banking, including:

  • growing mortgage balances by over 40% to exceed £20 billion, significantly ahead of market growth
  • growing savings balances by more than 30% to over £21 billion, again exceeding market growth
  • returning to profitability with an underlying profit of £53.4 million in 2013, after an underlying loss of £2.5 million in 2012, having successfully integrated the Northern Rock plc business
  • creating 450 new jobs to support growth of the business
  • maintaining the strength and quality of the balance sheet, with a Common Equity Tier 1 ratio of 15.3%
  • confirming the repurchase of the Government’s Tier 1 Capital Notes which formed part of the overall consideration for the purchase of Northern Rock plc in 2012

Jayne-Anne added: “It was a pleasure to welcome the Chancellor to our offices in Newcastle today. We have grown the business strongly, exceeding market growth in both our core mortgage and savings business, and returned to profitability. We have achieved this whilst maintaining the strength and quality of our balance sheet. To support this growth I am delighted to be able to announce that a further 200 new jobs will have been created throughout 2014.”

Virgin Money has also commenced the first phase of the rollout of its Essential Current Account2, which is being made available to customers through Virgin Money’s stores in Scotland and Northern Ireland. Virgin Money will develop its current account range over time, providing choice and diversity. The range will be built around principles of simplicity, fairness and transparency.

Commenting on the current account, Jayne-Anne said: “The regional roll-out of the Virgin Essential Current Account, starting in Scotland and Northern Ireland, is the next significant milestone for the business. The Essential Current Account sets a new standard for Basic Bank Accounts. The product is simple, transparent, offers a fair rate of interest, has no unpaid item fees and is in keeping with our quest to make banking better”.

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Media Contacts:

Virgin Money Press Office:
0191 279 4676


1 The Government will receive £154.5 million cash for the Notes, which were issued to HM Treasury in January 2012 at a par value of £150 million as part of the sale of Northern Rock plc. Tier 1 notes are capital instruments and were used by Virgin Money, along with cash payments, to pay for Northern Rock plc.

2Virgin Essential Current Account

Account nameVirgin Essential Current Account
Min Age18
Credit interest1% gross3 / AER4
Direct Debit / Standing OrderYes
Charge for unpaid Direct Debit / Standing OrderNil
Debit CardVisa Debit
Store / Post Office accessYes
Free access to UK ATMsYes, Virgin Money and other networks
Overdraft facilityNo
ID to open accountProof of address plus drivers licence or passport
Credit check requiredYes, to confirm the identity of the applicant and to check for undischarged bankruptcy

3Gross is the rate of interest paid to eligible non-taxpayers without deduction of tax. Interest will be paid net of tax unless the account holder is eligible to receive interest gross and submit the required registration form.

4AER stands for Annual Equivalent Rate and shows what the interest rate would be when interest is paid and added to the capital balance each year.

About the Bond

  • The £160m bond takes the form of CRD4 compliant Additional Tier 1 capital issuance. It will be listed on the Luxembourg Stock Exchange, with Bank of America Merrill Lynch acting as Sole Bookrunner.

About Virgin Money

  • Virgin Money provides savings, mortgages, credit cards, pensions, investment and protection products
  • Virgin Money’s business ambition is to make “everyone better off” – this philosophy underpins our approach to business by offering good value to customers, treating employees well, making a positive contribution to society and delivering a profit to shareholders
  • Virgin Money is the official sponsor of the London Marathon, the biggest annual one-day fundraising event in the world. Virgin Money has helped London Marathon runners raise over £¼ billion through Virgin Money Giving, the not-for-profit online fundraising service, since 2010.