VIRGIN Money is creating more than 100 North-East jobs in a move that will see it repay the Government £154m from a deal to buy Northern Rock.

The firm says it is creating 200 new posts, including 120 in the North-East.

Bosses have also revealed it is giving back the £154.5m, known as tier one notes, which will repay a funding package put in place when Virgin bought Northern Rock from the Government in 2012.

The jobs announcement move, revealed yesterday by The Northern Echo, was welcomed by Chancellor George Osborne in a visit to Virgin’s headquarters in Newcastle.

Mr Osborne praised the company for its progress since buying Northern Rock.

He said: “A key part of the Government’s long-term economic plan is to increase competition in the UK’s banking system so consumers have more choice and get a better deal.

“This includes wide-ranging action to support new and smaller banks, so it’s fantastic to see a market challenger like Virgin growing, launching new and different products, and creating more jobs in the North-East.”

Jayne-Anne Gadhia, Virgin Money’s chief executive, added: “I’m delighted to announce the repurchase of the tier one capital notes from the Treasury.

“The issue of the new tier one notes marks Virgin Money’s inaugural access to the unsecured debt capital markets.

“Investor feedback was very positive and the transaction was comfortably oversubscribed representing a significant vote of confidence in Virgin.

“The support demonstrated by investors is a reflection of our strong balance sheet, conservative approach to capital and liquidity and strong and profitable growth delivered in our core business.”

Earlier this year, Mrs Gadhia told The Northern Echo that Virgin was determined to break the big five banks’ strangehold on current accounts, but warned against political intervention in the banking sector.

This summer, the firm is entering the current account market with between 50,000 to 100,000 customers expected to sign up for the no-frills deal, which Mrs Ghadia hoped would help it challenge the oligoploy of the big five banks.

She added: “I'd prefer market forces, not politicians to decide the size of banks.

“I wouldn't advocate breaking them up, but we are keen to see an end to their stranglehold on current accounts.”

Virgin Money employs more than 2,500 staff, with about 1,700 people based in Newcastle.

It bought Northern Rock from the Government for an initial £820m, and in March this year revealed it had made an underlying profit of £53.4m, against losses of £2.5m a year earlier, thanks to market-beating growth in mortgages and savings.

The business acquired a network of 75 branches, a £14bn mortgage book and retail deposits worth £16bn when it bought Northern Rock, whose collapse in 2007 sparked the UK’s financial crisis.

However, the Rock's multi-billion-pound book of loans was left in state hands to be wound down.