The new owner of bailed-out Northern Rock bank has committed to supporting the Northern Rock Foundation at least until the end of 2013.

Chancellor George Osborne today announced that Virgin Money has bought Northern Rock plc for a price tag which could end up at over £1bn. The government has praised the move as liberating taxpayers from bank ownership and creating more competition in the high street.

But of more interest to the charity sector, Virgin Money has committed to supporting the Northern Rock Foundation, which last year made just shy of £12m in grants and has long been seen as a critical grantmaker in the northern regions.

The commitment for an additional year of support means that the Foundation will receive funding until the end of 2013, but both the foundation and Virgin Money have indicated an interest in extending the partnership beyond that time.

Concerns that the new owners may not have to commit to the charitable work of the bank had been raised by charities and MPs as recently as this summer. In January 2010 Northern Rock bank committed to funding the Foundation to the tune of 1 per cent of pre-tax profits for a two-year period, but at the same time the Foundation had lost its £15m-a-year funding agreement with Northern Rock Asset Management and has been drawing on its reserves to continue grantmaking throughout this year.

In a statement today, Virgin said: “Upon completion, Northern Rock’s current commitment to the Foundation will be extended immediately, in respect of Northern Rock’s existing business, to the end of 2013. This gives Virgin Money and the Northern Rock Foundation time to agree how they will work together after that.”

'Exploring ideas for an ongoing relationship'

Alistair Balls, chairman of the Foundation, welcomed the new owners of Northern Rock.

“We look forward to working with Virgin Money and their not-for-profit arm Virgin Money Giving and hope that this will result in an enduring and expanding role for the work which the Foundation has pioneered over the past 14 years,” he said.

“We had an initial discussion about the relationship that the Foundation and Virgin Money Giving might have in future. We are both committed to exploring ideas further and seeking to establish an ongoing relationship that will enable the Foundation’s work tackling disadvantage and improving quality of life in the North East and Cumbria to continue to have a significant impact on the lives of vulnerable people.”