Northern Rock, the nationalised British bank, has become on Thursday the first bailed out lender in the UK to be sold back to the private sector, according to the treasury.

The British government has given the go-ahead for the £747m loss-making deal with Richard Branson's Virgin Money almost four years after Northern Rock's near collapse.

The deal, which leaves taxpayers with a loss of an estimated £400m, is considered unprofitable and suggests the UK has given up on turning a profit on the bank shares it holds.

As part of the contract Virgin Money agreed to make no further compulsory redundancies for at least three years, the government statement said.