consumer bank . for other uses see northern rock disambiguation . not to be confused with northern bank . northern rock former type plc industry bank fate sold to virgin money founded 1850 northern counties 1865 rock 1965 1965 merger as northern rock 2010 split from bad bank defunct 12 october 2012 2012 10 12 headquarters northern rock house gosforth newcastle upon tyne england uk number of locations 75 branches 2011 area served uk formerly operated in denmark ireland guernsey services banking mortgages revenue 5 billion 2006 operating income 627 million 2006 profit 443 million 2006 owner virgin money number of employees 6000 2007 1 website www.northernrock.co.uk northern rock formerly the northern rock building society was a british bank . it was based at regent centre in newcastle upon tyne united kingdom . northern rock was best known for becoming the first british bank in 150 years to suffer a bank run after having had to approach the bank of england for a loan facility to replace money market funding during the credit crisis in 2007 . 2 having failed to find a commercial buyer it was taken into public ownership in 2008 and was then bought by virgin money in 2012 . during 2012 the northern rock brand was phased out and replaced by virgin . northern rock building society became northern rock bank in 1997 when the society floated on the london stock exchange with the ticker symbol nrk . on 1 january 2010 it was split into a good and a bad bank the northern rock brand was transferred to the good bank and the other division was renamed northern rock asset management nram with its own unique branding . 3 contents 1 history 2 subprime mortgage crisis and nationalisation 3 operations 4 location 4.1 gosforth site 4.2 outside the uk 5 corporate image 6 board of directors 7 sponsorship 8 northern rock foundation 9 see also 10 references 11 external links history edit northern rock building society was formed in 1965 as a result of the merger of two north east building societies ; the northern counties permanent building society established in 1850 and the rock building society established in 1865 . during the 30 years that followed northern rock expanded by acquiring 53 smaller building societies most notably the north of england building society in 1994 . 4 along with many other uk building societies in the 1990s northern rock chose to demutualise as a building society and float on the stock exchange as a bank . throughout this period a concern against demutualisation was that the assets of a mutual society were built up by its members throughout its history not just by current members and that demutualisation was a betrayal of the community that the societies were created to serve . 5 6 7 8 northern rock chose to address these concerns by founding the northern rock foundation which funded community based projects . 9 at its stock exchange flotation northern rock distributed shares to members with savings accounts and mortgage loans ; the flotation share price was 4.51908 . 10 it joined the stock exchange as a minor bank and was expected to be taken over by one of its larger rivals but it remained independent . in 2000 northern rock gained promotion to the ftse 100 index but was demoted back to the ftse 250 in december 2007 11 and later suspended from the lse on nationalisation . on 14 september 2007 during the financial crisis of 2007 2010 the bank sought and received a liquidity support facility from the bank of england 12 following problems in the credit markets caused by the financial crisis of 2007 2008 . the bank was more exposed than others to restrictions in the supply of credit because of the way it had funded its expansion . the bank was nationalised at 00 01 on 22 february 2008 following two unsuccessful bids to take over the bank neither being able to fully commit to repayment of taxpayers money . in doing so the government effectively took ownership of the insolvent institution away from its shareholders without reimbursement . the media reported cases where some shareholders had their life savings in the shares which were taken from them . 13 14 the shares had already lost over 90 % of their value prior to nationalization and were valued at nil in an independent valuation process as the government had not guaranteed aid . this would later form part of shareholder s action to seek compensation as at that point the aid was certain and the company had never stopped operating as a going concern . clarification needed on 1 january 2010 the bank was split into two parts assets and banking . 15 in june 2011 the bank was officially put up for sale back to the private sector and on 17 november 2011 it was announced that virgin money were going to buy northern rock plc for 747 million up front and other potential payments of up to 280 million over the next few years . 16 the sale went through on 1 january 2012 . 17 18 the government said it had no plans to sell northern rock asset management . there would be no further job losses except for the ones already announced . virgin also pledged to keep the headquarters of the bank in newcastle upon tyne . 19 the combined business now operates under the virgin money brand . 20 on 12 october 2012 northern rock plc was renamed virgin money plc and virgin money limited was renamed northern rock limited . by this time the northern rock website had effectively become a soft redirect to virgin money s website . subprime mortgage crisis and nationalisation edit main article nationalisation of northern rock people queuing outside a branch in golders green london on 14 september 2007 to withdraw their savings due to fallout from the subprime crisis . the clock outside this branch on northumberland street newcastle upon tyne is emblazoned with the bank s name and has become a popular image in print and television coverage of the northern rock crisis . following the virgin rebranding this clock still features the name northern rock . a branch of the northern rock with virgin money branding on briggate in leeds . under the chairmanship of matt ridley northern rock had a business plan which involved borrowing heavily in the uk and international money markets extending mortgages to customers based on this funding and then re selling these mortgages on international capital markets a process known as securitisation . in august 2007 when the global demand from investors for securitised mortgages was falling away the lack of money raised by this means that northern rock became unable to repay loans from the money market . this problem had been anticipated by the financial markets which drew greater attention to it . on 14 september 2007 the bank sought and received a liquidity support facility from the bank of england to replace funds it was unable to raise from the money market . this led to panic among individual depositors who feared that their savings might not be available should northern rock go into receivership . the result was a bank run the uk s first in 150 years where depositors lined up outside the bank to withdraw all of their savings as quickly as possible particularly since everyone else was doing the same . 2 on 22 february 2008 the bank was taken into state ownership as a result of two unsuccessful bids to take over the bank neither being able to fully commit to repayment of taxpayers money within three years . 21 the bank is managed at arms length by the government through uk financial investments . 22 the bank planned to repay the government debt within three to four years primarily by encouraging mortgage customers to take their mortgage to another lender . costs were also reduced by reducing numbers of staff . 23 as of 3 march 2009 the bank was repaying the loan well ahead of target owing a net balance of only 8.9 billion of the loan which stood at 26.9 billion at the end of 2007 . 24 by october customers appeared to be regaining confidence in the bank when it emerged that there had been a surge in the number of new accounts which had been opened . 25 people perceived northern rock as a safe place to put their money given that it was currently government owned . however there was no guarantee that if northern rock was to fail that the government would top up any compensation over and above the standard 85 000 offered by the financial services compensation scheme . 26 former shareholders and hedge funds also took legal action in january 2009 to get compensation for their shares ; the shareholders lost the case . 27 28 they also lost their appeals in the british courts but hoped to take the case to the european courts . 29 30 on 8 december 2009 it was announced that the valuer andrew caldwell had decided that the northern rock shareholders should get no compensation . 31 on 23 february 2009 northern rock announced that they would be offering 14 billion worth of new mortgages over the next two years as a part of their new business plan . 32 this new lending was partly funded by an increase in the government loan and a reversal of previous strategy to pay the loan off as quickly as possible by actively encouraging mortgage customers to leave when their mortgage deal matures . the reason for this change was government policy to increase the availability of credit . this 14 billion will be split into 5 billion in 2009 and 9 billion in 2010 . 33 needs update potential buyers for the bank included virgin money national australia bank nbnk santander blackstone tesco towerbrook yorkshire building society and coventry building society . 34 former chancellor of the exchequer alistair darling had stated that he was in no hurry to return the bank to the private sector . 35 the bank was split into two parts assets and banking on 1 january 2010 . 36 on 15 june 2011 it was announced that the bank was to be sold to a single buyer in the private sector by the end of the year . 37 on 22 march 2011 the bank issued its first mortgage securitisation since the 2007 recession which nearly brought the bank down . 38 on 17 november 2011 it was announced that virgin money were going to buy northern rock plc for 747 million . 16 the sale was completed on 1 january 2012 and by july of that year a further 73 million deferred consideration was paid by virgin . in 2014 virgin money repaid a further 154.5 million that it had received as part of the refinancing package . 39 operations edit a typical northern rock branch on northumberland street newcastle upon tyne in 2007 . on 9 january 2012 it was given a temporary virgin money rebrand when richard branson visited newcastle and along with all other branches was fully rebranded later that year . northern rock has been one of the top five mortgage lenders in the united kingdom in terms of gross lending according to council of mortgage lenders statistics . 40 as well as mortgages the bank also deals with savings accounts and insurance . home and contents insurance was dealt with by axa whilst legal & general whose mortgage book northern rock took over arrange life insurance investments . the bank sold credit cards until 2003 when it sold the business to the co operative bank in order to free capital for its rapid growth in mortgage lending making a profit of more than 7 million . northern rock continued to sell credit cards