The British government is selling mortgage lender Northern Rock, the country's first victim of the credit crisis, to Richard Branson's Virgin Money.
Virgin Money, which is part of the wider Virgin Group, is paying £747 million (US$1.2 billion) on closing but there are provisions for the government to receive up to £1 billion in total, the Treasury said Thursday.
Virgin Money has promised that it will not lay off any more employees and will maintain the full branch network for at least three years.
"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," said Treasury chief George Osborne.
He said the sale would also increase competition in the British banking sector, which is dominated by four large banks.
The deal drew some criticism, however, because the sale price was less than the £1.4 billion that taxpayers had invested in the bank.
"I'm very concerned about whether we are getting really good value for the taxpayer," said Mark Field, a lawmaker in the Conservative Party, which is Osborne's party too.
Ed Miliband, the leader of the opposition Labour Party, also said there will be "serious questions asked about the deal done to sell Northern Rock today, and in particular about the losses to the taxpayer."
The sale includes 75 branches and 2,100 staff, one million customers, retail deposits of £16 billion and a mortgage book of £14 billion.
Virgin Money was founded in 1995 and has around three million customers. The purchase of Northern Rock is funded by a consortium led by Virgin Group and W.L. Ross & Co, a turnaround specialist.
"Banking in the UK needs some fresh ideas and an injection of new competition," Branson said.
Before the bank was nationalised, Virgin Money had made an offer in 2008 to take over Northern Rock but it was rejected by the then government as too risky and too expensive.
The sale includes provisions for an additional £50 million cash to be paid to the government six months after completion, and up to £230 million if there is a profitable flotation or sale within five years.
The government last year split Northern Rock into two businesses: Northern Rock PLC, which Virgin Money is buying, and Northern Rock Asset Management PLC, which holds a portfolio of the riskiest loans.
The government plans to wind down the asset management unit over time to repay £50 billion advanced by the Treasury.