NORTHERN Rock’s ownership saga finished where it started yesterday with Sir Richard Branson finally getting his hands on the bank he first tried to buy following its collapse four years ago.

The deal, potentially worth more than £1bn, will see the Northern Rock name, which has strong ties in the North-East, not least because it is splashed across Newcastle United’s shirts, disappear on January 1, when the deal is expected to be completed.

But many of Northern Rock plc’s 2,100 staff cheered as they were told Virgin Money was buying the bank and guaranteeing no job cuts for at least three years, past the 680 already announced earlier this year.

Instead, the bank’s Newcastle base will become the headquarters for the combined business, all 74 Northern Rock branches will be retained, and there are plans by Virgin to open more.

Although Virgin Money already has more customers than Northern Rock, three million compared to the Gosforth bank’s one million, the deal instantly give Virgin the high street presence it has been seeking, as well as entry to the mortgage market.

A Virgin spokesman said: “It is the branch network combined with the ability to make a big entry into mortgages. It is a perfect marriage between Virgin Money’s skills and the skills of Northern Rock, which is savings and mortgages. It is a perfect integration.”

Yesterday’s news was no surprise, with Virgin favourites to take over the bank since Chancellor George Osborne put it up for sale in June.

The firm, majority owned by Sir Richard and billionaire Wall Street investor Wilbur Ross, had first made moves to buy the Rock for £200m before it was nationalised in February 2008. Sir Richard said at the time he could have saved most of the 6,000 jobs at the bank, a number since slashed in half.

Despite Virgin paying considerably more for the bank now, the spokesman added: “It is a good deal. We have had our eye on Northern Rock for some time.”

When asked if it should have been sold to Virgin in 2008, Treasury Minister Mark Hoban, who visited the bank’s headquarters yesterday, said: “I think that is a decision the previous government should be accountable for. We inherited it in public ownership and I think the team there has done a good job stabilising it.”

Virgin’s previous offer was before Northern Rock’s split last year into a so-called “good bank” Northern Rock plc, and “bad bank” NRAM, employing about 1,250 people, which is in Government ownership.

Although there was some criticism that the bank was being sold at a loss, Virgin submitted the highest bid and the deal was broadly welcomed.

The Government will receive an initial £747m with the potential to secure £1bn in total – less than the estimated £1.4bn it has injected into the bank during its period of public ownership.

County Durham-born Mr Hoban said: “Virgin put the best bid in and probably gave the best offer for the North- East. It is a win-win situation.”

He added: “As someone born and bred in the North-East, I have taken a particular interest in how it has fared and I am pleased we have a good deal with a good new owner.”

The other confirmed bidder for Northern Rock, NBNK Investments, led by the North- East lender’s former chief executive, Gary Hoffman, was sanguine yesterday about missing out as it continues to focus on acquiring the Verde business, the assets Lloyds Banking Group must relinquish under a state aid deal.

A spokesman said: “Verdi is our priority, although we would have liked Northern Rock as well.”