Northern Rock sale investigated by National Audit Office
The government has strongly defended the timing and value of the sale
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The £747m sale of Northern Rock to Virgin Money is to be investigated by the National Audit Office (NAO).
NAO head Amyas Morse confirmed the audit in a letter to shadow financial secretary Chris Leslie, but added that he had no power to intervene.
The sale of the state-owned bank is likely to mean a loss of between £400m and £650m and Labour is urging the government to delay the sale.
However, ministers insist they got taxpayers the "best possible deal".
Mr Leslie had asked the public spending watchdog to delay the sale so it could pre-assess the deal.
However, in a letter to the Labour MP, Mr Morse said the NAO could only investigate a completed sale and could not stop the deal going through.
"I can confirm that I have decided to conduct a value-for-money study in relation to the creation and sale of Northern Rock plc," said Mr Morse.
'Matter of urgency'
"However, my role in conducting value for money studies is to act as an auditor, in this case of the completed sale transaction."
He added that the probe would be carried out "as a matter of urgency".
Continue reading the main story “ Start Quote Ministers haven't thought through this deal carefully enough” End Quote Chris Leslie Shadow financial secretary
It is thought the investigation will report back before the Commons summer recess next year.
Virgin Money struck a deal to buy Northern Rock for £747m in November, with the government saying it had got the "best possible deal" for taxpayers.
It argued it was the right time to sell because Northern Rock was predicted to remain loss-making well into 2012.
But Labour criticised the move, saying the government should have sought an extension on an EU deadline which requires the bank to be sold by the end of 2013.
Chancellor George Osborne has said the deadline was negotiated by his Labour predecessor, Alistair Darling.
Taxpayers originally injected £1.4bn into Northern Rock in 2010, meaning at face value the sale represents a loss of £650m.
Mr Leslie said on Saturday: "There is clearly strong evidence to suggest that this Northern Rock firesale represents poor value for money for the taxpayer.
'Asset-stripping potential'
"This investigation by the independent National Audit Office confirms that serious questions hang over George Osborne's deal.
"At present there is the possibility that those buying Northern Rock could asset-strip so much from the firm that they get back virtually every penny they invest within a matter of months.
"Ministers haven't thought through this deal carefully enough - they have a duty to do better than this."
Northern Rock was nationalised during the start of the global credit crunch in 2008.
In 2010, the Labour government split the bank into two - Northern Rock plc, and Northern Rock (Asset Management).
The bank's bad debt was placed in the latter, which remains saddled with the cost of being bailed out. It owes the Treasury £21bn.
The government has said it has no plans to sell Northern Rock (Asset Management).
The clock outside this branch, on , 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. 
Today  finalised a deal with the British Government to acquire the nationalised Newcastle upon Tyne-based bank  for £747 million. During 2012, the bank will be rebranded as a Virgin company and the current Northern Rock customers will become customers of the enlarged Virgin Money.

The Northern Rock bank had been  following the revelation that the company had received emergency support from the UK Government. Northern Rock had required support due to its exposure during the  in 2007. Sir 's  had a bid for the bank rejected prior to the bank’s nationalisation. In 2010, while nationalised, the current high street bank Northern Rock plc was split from the ‘bad bank’, . Virgin have only purchased the ‘good bank’ of Northern Rock, not the asset management company.

The deal which could have additional payments to put the total value of the sale to over £1 billion had been first announced on 17 November 2011 and was criticised by some as not being a good enough deal for taxpayers. Opposition such as the  requested that the  investigate the sale, and for it to be put on hold. By the beginning of 2012, the deal had been approved by the  and the  for merger clearance.

Jayne-Anne Gadhia will be Virgin Money's CEO and former deputy governor of the Bank of England, Sir , will be Chairman. Virgin have also pledged to maintain an operational headquarters in Newcastle upon Tyne as well as maintaining the current branches.