Experts fear the bank has been sold virtually for free under a deal that could see Sir Richard Branson’s group claim its cash supplies, according to the Daily Mail.

Lord Oakeshott, Lib Dem and a City investment expert, said he was very concerned the sale is ill-advised and ill-timed, saying: “[US investor] Wilbur Ross and his frontman Sir Richard Branson have taken the Treasury and the taxpayer for a ride.

“You couldn’t imagine a worse time to get full value from selling a bank.”

Virgin Money announced it will pay £747m for Northern Rock after ministers accepted an offer ‘in the best interests of the taxpayer’.

Branson’s company is putting up £50m, with around £250m from Wilbur Ross and £50m from an Abu Dhabi investor.

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However, shadow financial secretary to the Treasury Chris Leslie warned the actual price tag will mean very little, because Virgin could raid Northern Rock’s cash reserves, built up since the credit crunch, in order to fund the deal.

The worries surround the amount of Tier One Capital ratio Northern Rock has.

Most banks have a buffer of around 10% of their loan book to absorb default losses. But Northern Rock’s was more than 30% at the time of its half-year results in June.

However, Virgin has only pledged to keep the capital ratio at ‘a minimum of 15%’.

It is feared Virgin could put around £250m from Northern Rock’s reserves towards the buy out, as well as another £345m if the ratio was cut even more.

However, a Virgin spokesman said: “We are not ‘asset stripping’, but are focused on growing a safe, secure and solid business.”