Virgin Money has said it will give the Northern Rock Foundation, which faces closure, £1m per year, for the next five years – but only if £3m can be raised from other businesses in the region.

Sir Richard Branson was speaking in the North-East yesterday and said: “There are 11 companies that are bigger than Virgin Money in the North-East and the Northern Rock Foundation should focus on getting others to match the funds Virgin Money has offered to put in.”

Last month the Foundation announced that it will close after being unable to agree a new funding arrangement with the bank.

Alastair Balls, chairman of the Foundation, said: “Northern Rock Foundation received the offer from Virgin Money this morning. It is an interesting proposition, which we are ready to discuss, and expect to meet with Virgin Money this week. Any further public comment at this stage will not assist a constructive discussion.”

Virgin Money’s chief executive, Jayne-Anne Gadhia, outlined Virgin Money’s latest plans in a letter to Ed Miliband, at the weekend, after the Labour leader said he was “deeply concerned” about the situation when he was visiting the region last week.

Gadhia said: “The Foundation has insisted that it requires a minimum annual donation of £4m to continue to operate. You will appreciate that for any company, let alone one with the history of Northern Rock, this is a huge amount of money to commit to one charity.”

She added: “We simply cannot support the £4m requirement of the Northern Rock Foundation on our own.” The aim was for the “legacy of the Northern Rock Foundation to be one shared with the North East business community”.

Northern Rock rejected social housing plan

Virgin Money’s original offer to Northern Rock was to run a housing development in the area. Gahdia said this was “inspired by discussions we have had with local councillors and there is no doubt this could have grown to achieve material social and economic benefits to the region”.

Chi Onwurah, MP for Newcastle upon Tyne Central, urged Virgin Money to reverse its decision on the Foundation, responded by saying she was “disappointed”. She said: “I can quite understand that they did not wish to become a housing association.”

She added: “I am now concerned that Virgin Money’s corporate citizenship in the city and region is focused entirely on entrepreneurship which, while very important, is a much narrower remit and will engage fewer people and not necessarily those in greatest need.”

The Foundation was established in 1997 when the Northern Rock Building Society demutualised and until the bank collapsed in 2007 it donated 5 per cent of its pre-tax profit to the Foundation. Between 2008 and 2010, while the bank was under public ownership, the Foundation received £15m per year.

As part of the sale of Northern Rock Plc to Virgin Money in 2011 the new owner agreed to donate 1 per cent of the bank’s pre-tax profits to the Foundation until the end of 2013.

Accounts filed with the Charity Commission show that for the financial years ending December 2011 and December 2012 the Foundation had an income of less than £500,000. The three previous years its income had been more than £15m.

This article was ammended following clarification that the latest offer from Virgin Money is not related to social housing.