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Virgin of the Rock

Robert Peston | 10:59 UK time, Friday, 12 October 2007

We now appear to have strayed into “you couldn’t make it up” territory in respect of the future of Northern Rock – with Sir Richard Branson riding to the rescue on his jumbo.

Richard BransonHe is putting together a consortium of investors to take a majority stake in Northern Rock, which would keep its stock market listing but would be rebranded as Virgin Money.

The business would be run by Jayne-Anne Gadhia, a Virgin veteran who has been working with Branson on developing a mortgage business for him.

It is still early days and a deal is by no means certain. But Branson is in earnest: there’ll be an official statement from the company soon-ish.

There are, of course, big obstacles, not least of which is that Northern Rock has now borrowed £13bn in emergency funds from the Bank of England – with the loans underwritten by the Treasury – and all of that would have to be refinanced by any successful bidder.

And, what’s more, the Treasury is also insuring (for a fee) all deposits at Northern Rock.

No deal will take place with any bidder, Virgin or anyone else, if all the government support were to be withdrawn immediately on completion of the deal. In current market conditions, refinancing all that would be just too difficult.

So the chancellor faces a troubling decision in respect of how quickly to demand his (our) money back.

Comments   Post your comment

  • 1.
  • At 11:38 AM on 12 Oct 2007,
  • simon.clemmitt wrote:

When oh when are you going to reveal your sources on the whole NR affair ? You always appear to be ahead of the game in this whole saga or you once again reporting soundbites as facts ?

  • 2.
  • At 11:47 AM on 12 Oct 2007,
  • Paul Milner wrote:

Hmm, Virgin Rock or Northern Virgin?
Caught between a Rock and a hardface?

  • 3.
  • At 11:47 AM on 12 Oct 2007,
  • jono wrote:

I imagine you're not 'into' tabloid journalism but surely the headline for the piece was begging for a pun... how about 'Virgin ditches music for Rock' or perhaps the more obvious 'Virgin on the ridiculous'?!!

  • 4.
  • At 11:52 AM on 12 Oct 2007,
  • John white wrote:

So the band plays on. another day another rumour about a potential buyer. One wonders just how many new mortgages have been agreed by the Rock in recent weeks and at what rates of interest? Borrowing from the Old Lady is expensive fun so obviously the margins on new busines will hardly be stellar. Just how long this situation can continue is the headache which may have Mother Brown reaching for the aspirin. Propping up a borrow short lend long business in the current credit climate spells political trouble. Why some impertinent chappies might even start to ask whether the FSA is fit for purpose. In the meantime greed and fear will continue to drive the share price of the Rock. Keep watching the amount the Rock borrows from us because at some stage something will have to give.

  • 5.
  • At 11:55 AM on 12 Oct 2007,
  • Phil wrote:

I'm pleased to see Sir Branson is takign an interest in saving it. I've always got plenty of time for what he does.
But, please, please, do not rename the firm. It is a quintessential part of the north of England and sponsors most of the area's major sporting clubs.
Local folk take pride in it being 'Northern' Rock and a local business and rebranding it Virgin Money would not go down well. It'd be like someone deciding to rename Newcastle Brown Ale.
Other than that though, I wish his bid well.

  • 6.
  • At 12:38 PM on 12 Oct 2007,
  • Eveleigh Moore Dutton wrote:

Would the newly acquired bank then be named after that mythical creature, Northern Virgin?

There has been much speculation on who might buy Northern Rock over the past few weeks, and it has all come to nothing. If anything, it just isn't the right time for anyone to be financing takeovers by 'borrowing' money to buy it. This new speculation is no exception, but of course it does bump the share price slightly ;-).

I also wasn't aware that Northern Rock had yet taken up the Bank of England's loan offer. This is an emergency loan, remember? I'm not entirely sure why this keeps getting reported as some kind of fact by so-called analysts. It was reported that NR had secured some finance from a US bank (Citigroup I think) at more favourable rates should they need it. This raises the possibility of Northern Rock remaining as an independent company without the need for outside finance.

The facts of the matter are the Northern Rock is still a completely solvent and stable business. The share price has obviously taken a battering which has raised takeover speculation, but in this negative borrowing climate many companies are pretty risk-averse and just can't finance takeovers and Northern Rock does not desperately need to be bought.

The odds are that, certainly for the foreseeable future, Northern Rock will remain as an independent concern and no amount of silly-season speculation is going to change that.

  • 8.
  • At 01:22 PM on 12 Oct 2007,
  • mark wrote:

@Phil #5

There is more to the north of england than Newcastle and the north east (thank god).

Northern Rock means nothing to me, despite being a northerner, and the chances of it keepings its current name are zero, should it be sold.

Get over it :)

  • 9.
  • At 01:23 PM on 12 Oct 2007,
  • Rob Meade wrote:

Before we slag off Richard Branson perhaps we should take a look at the fact that a lot of peoples jobs could well be saved.

I dont pretend to have a thorough knowledge of all things "financial" or indeed in Richard Bransons dealings in other areas, but he certainly also seems to come across as a genuine person.

I would have thought that his involvement in a project like this would perhaps reassure people who currently bank with Nortern Rock.

  • 10.
  • At 01:27 PM on 12 Oct 2007,
  • Paul Russell wrote:

Virgin buying Northern Rock could be good news for the ailing bank. The Northern Rock brand is now tainted and a re-brand to Virgin Money could restore some confidence.

  • 11.
  • At 01:28 PM on 12 Oct 2007,
  • Robbie wrote:

Sounds to me just product placement - whatever the source - Branson and Virgin gets publicity.

The Rock will not be allowed to fail - it would be the start of a very slippery and messy slope.

£13,000000000000 plus (our) money at stake!! - makes winning the lottery look like a booby-prize.

Yet it is ALL your fault!! (LOL)

Have to laugh (sorry)

Peston's Picks causes Rock wobble - NOT inept, inefficient and breathtakingly foolish management!!

Keep them wobbling Robert.

  • 12.
  • At 01:30 PM on 12 Oct 2007,
  • Ian wrote:

As a share holder I am not in favour of this.The company will still need to be refinanced by bank loans no matter who owns it.It seems that Branson has confidence in the business model,so why should the present share holders not gain the benefit if NR can get a good refinancing deal from US banks as has been mooted?We have already been denied our dividend,now it seems that we may be done out of our investment value as well.

  • 13.
  • At 01:42 PM on 12 Oct 2007,
  • Jane wrote:

I'm all for reading Robert Peston's comments on business matters in his blog - and he obviously has very good contacts and sources "close to the matter" which provide good, exclusive news stories.
However, I do object to reading a separate BBC news story written by someone else, where Peston, himself, is quoted as the main source.
"According to our business editor" is not the way to report news and is something the BBC is doing increasingly often, both online and on TV news broadcasts. What happened to quoting people who are actually involved in the story? Reporters are there to report on news - not to be the source of it.

  • 14.
  • At 01:59 PM on 12 Oct 2007,
  • Marc wrote:

I wonder how many other Northern Rocks are lurking out there, waiting to surface as the housing market cools?

In end, it is always Richard Branson or Philip Green, who are trying to save world from crisis :)

  • 16.
  • At 03:30 PM on 12 Oct 2007,
  • Elliott wrote:

Another interesting piece Robert - you do have very good insider contacts.

In response to Simon Clemmitt, I would defend Robert's use of his sources. Robert certainly hasn't been wrong yet and I trust his judgement on the reliability of his source.

Great journalism. My only plea is for BBC editors to do more business news.

  • 17.
  • At 03:31 PM on 12 Oct 2007,
  • Toni wrote:

This bid is just perfect for Branson, as you suggest he can fly into the fray and rescue the bank and by implication its customers as the consumer champion he revels in being. Don't get me wrong I have plenty of respect for Mr.Branson, but he is no fool and he will not enter this business unless he is fairly sure that he is not going to be liable for any nasty surprises on NR's balance sheet. He is not a banker and when offered the chance Lloyds TSB, who are highly conservative), walked away from Northern Rock. There may well be some serios issues about the quality of the balance sheet and I don't see Virgin getting involved unless these can be covered - probably by the BOE. There is serious money to be made in NR, the balance sheet was about £180bn and the market cap is currently about £1bn. Better Branson benifits than some US vulture fund, I am only surprised Lone Star hasn't purchased the company yet.

  • 18.
  • At 04:16 PM on 12 Oct 2007,
  • Scunner wrote:

Branson Rescues Rock from Pickle?

Preston's Pickle Rocks Branson

  • 19.
  • At 04:46 PM on 12 Oct 2007,
  • Nik Marshall-Blank wrote:

This has got to be the best solution by far. Richard Branson is a sincere shrewd business man (if he wasn't sincere the media would have dug it up by now) and in my opinion would win the next General Election if he formed his own party. He's one of the few good people left in the UK.

I hope he achieves it and saves the company and jobs too.

  • 20.
  • At 04:56 PM on 12 Oct 2007,
  • Ness wrote:

@Mark #8

You may be classed as being in the north of england however you can not comprehend the pride us "proper" northerners feel about our heritage, including our sports teams and local businesses.

I am personally in 2 minds with regards to a NR rebranding. Although the brand has taken an unfair hammering in the past few months it is, as mentioned earlier, a source of pride for the North East such as the Pound is to Britain.

With regards to Sir Richard's proposal I can only see good in what this man does. I personally work for a company which has recently, in the last 6months, rebranded under the Virgin umbrella and it has done wonders for the company and staff.

I wish the very best future for NR and their staff.

  • 21.
  • At 05:03 PM on 12 Oct 2007,
  • Chan wrote:

Its time Indian Bank ICICI put forward their proposal to buy Northern Rock

  • 22.
  • At 05:09 PM on 12 Oct 2007,
  • Tony wrote:

Why is everyone so hard on Northern Rock? They have been writing huge amounts of mortgage business and growing at an astounding rate. Their savers funds were never in any doubt, yet people are feeding on the carcass as if its the end.

They have hit troubled waters because of unforeseen cutbacks in the flow of money from mortgage investors following the american sub prime fiasco, not through any bad lending that they have done. They have a very good mortgage book. Other lenders are also in the same leaky boat but have kept quiet.

Northern Rock will rise again. They are a great Northern institution which has helped countless charitable causes. Get off their backs, they're going nowhere but up from here.

  • 23.
  • At 05:18 PM on 12 Oct 2007,
  • James Wallington wrote:

Onlookers may worry about the credibility of the Virgin potneital take over but two things are worth noting. Clearly, the take over news does not worry the markets after climbing some 7% today. Branson is no fan of the stock markets and being a publicly listed firm, Virgin may well choose to take NR private for a period of time. Secondly, it proves that the tried and tested Virgin business model still works well. Most of his business lines have seen ill-functioning or declining businesses being purcahsed and re-packaged with Virgin branding. Long may his success last if this reflects the state of entrepreneurialism in this country.

  • 24.
  • At 05:31 PM on 12 Oct 2007,
  • Dave wrote:

After the disaster that is Virgin Media, if I where a Northern Rock customer I would be extremely worried at the prospect of such a takover.

  • 25.
  • At 05:38 PM on 12 Oct 2007,
  • tom h wrote:

Ness @ 22

If you're saying that people in the north will only know to feel pride in a northern company if it has the word 'Northern' in the title, you're describing us as being even more stupid than any stereotype. Do we need 'left' and 'right' written on our shoes too? It would still be based near Newcastle, but with a different name.

And since not all of the shareholders are from the north, in what sense is it a northern company anyway? Is Nike a chinese company because they make their shoes there?

Richard Branson set to get heads rolling at the Rock!

Hope he has more success with this project than he has had with NTL and Telewest.

I have been a Telewest broadband customer for years but since the recent Virgin takeover things have become a real mess.

He fires thousands of staff and our services are now terrible, what was once a really good service provider is now hardly usable. In just a few short months they have capped our usage even though the adverts state clearly unlimited, changed the billing of phone calls from second to minute, now charge 25p per min to report a fault on its end, that’s if you are prepared to wait an hour to be answered.

I could go on all day about this but guess you get the picture. So the advice I would give to staff and customers of the rock is beware the light you might think is at the end of the tunnel is just what’s left of your credibility going up in flames.

"Northern Virgin Rocks"?

  • 28.
  • At 07:41 PM on 12 Oct 2007,
  • derrick wrote:

Why is everyone so hard on Northern Rock? They have been writing huge amounts of mortgage business and growing at an astounding rate. Their savers funds were never in any doubt, yet people are feeding on the carcass as if its the end.

They have hit troubled waters because of unforeseen cutbacks in the flow of money from mortgage investors following the american sub prime fiasco, not through any bad lending that they have done. They have a very good mortgage book. Other lenders are also in the same leaky boat but have kept quiet.

Northern Rock will rise again. They are a great Northern institution which has helped countless charitable causes. Get off their backs, they're going nowhere but up from here.

Tony, what planet do you live on??

Northern Rock has been 'Growing' because they have been readily giving out the majority of the sub-prime morgages to most of the UK.

Or are you suggesting 6/7x salary, 125% morgages and 100% interest only morgages are good good for a business in the current climate??

Northern Rock has been doing some crazy deals where they will never see the money again unfortunately

Richard Branson set to get heads rolling at the Rock!

Hope he has more success with this project than he has had with NTL and Telewest.

I have been a Telewest broadband customer for years but since the recent Virgin takeover things have become a real mess.

Since the rebranding thousands of staff have lost jobs and our services are now terrible, what was once a really good service is now hardly usable. In just a few short months they have capped our usage even though the adverts state clearly unlimited, changed the billing of phone calls from second to minute, now charge 25p per min to report a fault on its end, that’s if you are prepared to wait an hour to be answered.

I could go on all day about this but guess you get the picture. So the advice I would give to staff and customers of the Rock is beware, the light you might think that is at the end of the tunnel is just what’s left of Virgin/NTL/Telewest credibility going up in flames.

  • 30.
  • At 09:55 PM on 12 Oct 2007,
  • Jon wrote:

Branson is full of it. He wants to be seen riding to the rescue but in reality is looking to get all of Northern Rock's equity for little outlay while running the back off the back of the facility provided by taxpayers/the government. The BoE/Treasury should be getting equity upside for supporting Northern Rock, while instead they are giving value to shareholders by maintaining a bank that would otherwise have been forced to liquidate and taking only a small fee. Branson's bid will be spin/brand based as he looks to pick up the business and get a cheap shot/option at turning it around. He would not put anywhere near the amount of fresh capital in required to run the assets of Northern Rock, and I doubt his consortium can either, unless every player is receiving discounted equity in return for their senior facility.

Northern Rock should have been liquidated but the government has bailed them out entirely. It would not be suprising if the government seeks a populist solution to NR's problems by allowing Branson to takeover the NR with the BoE facility intact. The moral hazrd and the long term implications for inflation are grave. A flimsy takeover from Branson may still see NR fail if conditions in the UK housing market deteriate further leading to a complete revaluation of mortgage backed assets.

  • 31.
  • At 11:54 PM on 12 Oct 2007,
  • Carlos wrote:

I work for Virgin Media.Good Luck to you Northen rock you will need it.Mr you know who reminds me of Mr Maxwell we all liked him?

  • 32.
  • At 11:54 PM on 12 Oct 2007,
  • Carlos wrote:

I work for Virgin Media.Good Luck to you Northen rock you will need it.Mr you know who reminds me of Mr Maxwell we all liked him?

  • 33.
  • At 11:55 PM on 12 Oct 2007,
  • Gareth wrote:

Derrick, please check your facts and stop writing the sort of completely false statements which have been excacerbating Northern Rock's situation in recent times. Northern Rock has been nowhere near the sub-prime market. Its rate of arrears is less than half the industry standard - i.e. it has just about the safest loan book on the market. Its entire policy is based on selling to low risk customers. Please refrain from incorrect scaremongering. You don't work for one of the vultures trying to get a high quality loan book on the cheap do you?

  • 34.
  • At 01:32 AM on 13 Oct 2007,
  • b micheal wrote:

i personally think that NR can survive this downturn, looking the situation their shares have taken a pasting, but this attention has bumped their price. which to me just gives NR that extra bit of time to fight their way to some form of stability in time

  • 35.
  • At 04:01 AM on 13 Oct 2007,
  • Doug wrote:

As a Northern Rock Saver I am getting a much better deal than can be offered by Virgin Money. As I am also a "victim" of the Virgin takeover of NTL, I would move my savings the moment Virgin took charge.

  • 36.
  • At 07:46 AM on 13 Oct 2007,
  • David Harrold wrote:

Mr Peston,
Once again, as all you ever do is speculate. The flow of rubbish from you pen never ceases to amaze me. You are an utter charlottan. Shut up an go home.

  • 37.
  • At 08:04 AM on 13 Oct 2007,
  • Billy wrote:

Once again Branson is jumping on the bandwagon and creating publicity for himself. Whatever happened to Concord? I seem to remember he was going to buy it and keep it flying, we're still waiting for that to happen, perhaps if he buys Northern Roack he'll have enough money to get Concord airborn again

  • 38.
  • At 11:08 AM on 13 Oct 2007,
  • Philip Stone wrote:

I allways thought Richard Branson was a Banker!

  • 39.
  • At 11:36 AM on 13 Oct 2007,
  • J S wrote:

Well, well, well, when this first all came to a head my collegues and i were having a laugh about who would take NR over. I suggested Virgin, so there!!!! Never say never!

(N R employee)

  • 40.
  • At 12:38 PM on 13 Oct 2007,
  • Dorian wrote:

History is littered with 'Northern Rocks' and should the mortgages (6x salary, 125% loan, interest only. etc) be marked to market I suspect that the Balance Sheet would look 'odd'.
I'd be interested in the insurance 'fee' that the Bank is charging for their loans and how it was calculated given the housing price bubble or whether they expect to drop interest rates at the first signs of systemic weakness so the 'fee' might be artificially low and the Welfare State (my money) supporting this.
Perhaps Branson thinks that the Government(Brown) can't afford politically to allow a house price crash (as in 1990s)and which is why Brown created the 'really not independent' Bank Of England and made a complete hash of seperating regulatory responsibilities, so Branson probably thinks it's a one way ticket as the Government will bale him and other banks out.

  • 41.
  • At 01:37 PM on 13 Oct 2007,
  • Dave C wrote:

I suspect the savers with Northern Rock could lose out big time if Mr Branson rebrands it as Virgin Money.

As a silver saver with NR, I'm getting 6.3% AER on my deposits, with a guarantee for it to be no lower than Bank Base Rate until 31st Jan 2010.

Virgin Money does not appear to have an equivalent product at the moment, and their basic on-line saver account offers only 5.0% AER with the pathetic guarantee for it not to be less than 1% BELOW BBR until 5th Apr 2008 ... big deal!

Unless Branson is prepared to uphold the interest rates and guarantees on existing NR products, and quite how he can square that with his existing Virgin Money products I don't know, we could well see another run on the NR as savers flock to find a better deal.

  • 42.
  • At 04:56 PM on 13 Oct 2007,
  • SK wrote:

Derrick (lie 28)
Never mind what planet Tony lives on, what school did you go to? Morgage is actually spelt Mortgage.
Whilst I am correcting your incompetent grammar, I will also tell you some facts about Northern Rock. Northern Rock are Not a sub-prime lender, I repeat in case you did not get it the first time - Northern Rock are not a sub-prime lender. They have strict guidelines and proceedures in place when offering mortgages and they certainly do not offer mortgages that are 6/7 x salaries. If you do not want to take my word for it, then call into a local branch where they will gladly show you the relevant mortgage literature to back me up. Also, this true statement is reflected in the fact that their arrears are less than half the industry standard as is their level of repossessions. Therefore, please keep your lies to yourself in future as comments like yours are further tarnishing the reputation of a truly ethical bank.

  • 43.
  • At 06:31 PM on 13 Oct 2007,
  • Dave C wrote:

I suspect the savers with Northern Rock could lose out big time if Mr Branson rebrands it as Virgin Money.

As a silver saver with NR, I'm getting 6.3% AER on my deposits, with a guarantee for it to be no lower than Bank Base Rate until 31st Jan 2010.

Virgin Money does not appear to have an equivalent product at the moment, and their basic on-line saver account offers only 5.0% AER with the pathetic guarantee for it not to be less than 1% BELOW BBR until 5th Apr 2008 ... big deal!

Unless Branson is prepared to uphold the interest rates and guarantees on existing NR products, and quite how he can square that with his existing Virgin Money products I don't know, we could well see another run on the NR as savers flock to find a better deal.

  • 44.
  • At 08:47 AM on 14 Oct 2007,
  • Ewan Lamont wrote:

I don't fully understand what the Chancellor has promised in regard to Northern Rock but if he has created a bank that can't lose depositors' money it should be very desirable to investors as its deposits could be lent to favoured clients at low-low rates (say 1% for fifty years); if it goes bust the taxpayer collects the bill.

  • 45.
  • At 05:26 PM on 14 Oct 2007,
  • NR Employee wrote:

6 x salary??? Interesting I must say - you don't mention your sources but I would be interested in hearing them as I happen to know that the very best income multiple NR offers is 4.9, and that only applies to an income of over 100k.

I would say on average the income multiple used is 4.3 - 4.6 and that would depend on an individuals credit score.

For the record NR also DOES NOT lend sub prime.

  • 46.
  • At 09:00 PM on 14 Oct 2007,
  • theos wrote:

This is a bargain,even for the Staff and management.If the B of E,could only lend them,the taxes that the bank has paid over the years.Just to get over this trip up.If any body deserves a break, It's the staff and management,who have worked so hard,kept their Chin up,even though we are all trying to work out what it is that's hit them.The Australian consortium is the best option.Wait till you here their offer.

  • 47.
  • At 11:14 PM on 14 Oct 2007,
  • Paul R wrote:

Its interesting to read all the comments, savers thinking they will end up with a worse rate, and northerners worried about the bank changing name....but what about the other 'expressions of interest' that have been submitted, where there seems to be little interest in keeping Northern Rock alive in any form (name or interest rates), they just want the mortgage book.

Some people have compared this to Virgin Media, which is really just NTL with a new logo, where service doesn't seem to have got any better than it was before (but its still early days). Where as this is Northern Rock with a new logo, and I understand that both Virgin Money and Northern Rock are good at customer service.

Through all of this I have wondered why Barclays didn’t get its savings accounts emptied by queues of worried people, as in August they took their second loan from the Bank of England over a cash flow problem (http://news.bbc.co.uk/1/hi/business/6971731.stm) which in my opinion is worse than a mortgage funding issue relating to the global credit crunch, which in comparison is was something out of the control of Northern Rock, where as cashflow is something I would expect a bank to be better at.

  • 48.
  • At 09:05 AM on 15 Oct 2007,
  • Quietzapple wrote:

Virgin rebrands, which Northern Rock might benefit from ifit was to a brand less tainted with failure, (Ignoring the unfairness of Northern Rock's "failure.")

But, with the exception of Virgin Mobile until a year or so ago, which rides on the back of T-Mobile's network, Virgin offers diabolical service.

It is weird that Virgin Mobile's formerly good customer service has helped Branson actually run the customer service for other firms.

eg a year ago a third party train didn't run out of Birmingham New St and the care of the passengers was given over to Virgin. 7 hours later at 4 am . . .

  • 49.
  • At 09:42 AM on 15 Oct 2007,
  • ian wrote:

SK 42... anyone selling
a) =>100% mortgage
b) interest only with no secure capital repayment plan
c) in excess of 3.5 times salary
d) is relying on house prices to increase to secure equity should borrower default.

I selling sub prime. The way its packages may be worded to make it not look sub-prime, but look closer and you'll see that it is.

Branson would not enter into this if he did not see a way of making money. And he'll be helped along by the Gov. and the BoE to take the mill stone from around their necks

  • 50.
  • At 02:52 PM on 15 Oct 2007,
  • Simon wrote:

Funny how Richard Branson likes to see himself as the saviour.
Although when it comes to making 100 plus of his staff redundant from Virgin Money in Norwich to outsource the administration function to a third party he didn't seem to mind.
To me this just seems like another stunt from a very publicity hungry man. What better way to get publicity for his Vigin Money brand.

  • 51.
  • At 10:49 PM on 15 Oct 2007,
  • James C wrote:

As an NR employee, I am hopeful that Richard and the Virgin Group will be good news.

It looks as if we do need to have new owners, and certainly have to replace the men at the top but you have to remember that these are the undeniable facts...

1) We have a loyal customer base (even now).
2) We are a great north eastern institution donating millions to charity each year.
3) We have a highly competitive savings account range.
4) We are the most efficient bank in Europe.
5) We have an extremely high quality loan book.
6) (to blow our trumpet) we have a fantastic, dedicated workforce with high retention.

So the message - Come In Richard - the waters lovely... You'll make a mint, be a local hero and challenge the big boys who are trying to strangle us at moment..

  • 52.
  • At 11:47 AM on 16 Oct 2007,
  • J E wrote:

Mr Branson is certainly going his well trodden path to gain a lot of free publicity and brand building opportunities for Virgin.

I agree also that such a move is due to potentially getting a company "on the cheap" and being able to gain a stronger foothold in the banking sector. (despite the troublesome refinancing issues for the proud new owner) He seems to relish the opportunity to challenge the big players in whatever market he enters.

I also think that the media hype and speculation has made much more of a mountain out of this molehill than needed to be done.

Sad though it is that Northern Rock may lose its name (and I cant quite picture the North's teams such as the Falcons with "Virgin Money" on the front!) such events always happen. Would we think the same if the company was performing well and was just taken over by another bank and merged into its operations under their name? It is similar to when many Building Societies merged and lost their name. Sadly this counts for nothing in business. The only hope for remaining NR is that none of the bids come through and it remains an independent entity...although that is hard to see at present.

I cant see the BOE pulling out and requesting its money back before the situation is well on the way to being sorted and a recovery on the cards...would be complete madness otherwise!

Also a northerner just in case you wondered...

  • 53.
  • At 10:07 PM on 16 Oct 2007,
  • M wrote:

James C,

Be careful in your aspirations and remember how NR acheived the 6 points you raised: your current board.

Unprecidented curcumstances separate the mice from men.

Are you a mouse?

  • 54.
  • At 11:05 AM on 25 Oct 2007,
  • Clare wrote:

It would be interesting to know what Bransons views are on IVA's and bankruptcy. Northern Rock seem to think that bankruptcy is the only way forward............. I'm sure Northern Rock shareholders would agree that if more IVA's were agreed by Northern Rock, then potentially they wouldn't be in the financial pickle they're in at th moment!

  • 55.
  • At 11:34 AM on 02 Nov 2007,
  • Richard wrote:

I can't understand why the government is so keen on saving a bank but lacked the same commitment for saving Rover.

Why is a financial institution so important.

  • 56.
  • At 11:58 PM on 22 Nov 2007,
  • Doug P wrote:

Interesting point from Claire re the IVA's.( they reject 90% as standard . no other bank does this ! !!!!)

Northern rock borrow money on the strength of their own loan book !

Although I don't agree that they would rather push bankruptcy I do think they would rather people pay reduced payments in some kind of INFORMAL arrangement then accept a FORMAL insolvency arrangement.

Maybe its because if its FORMAL they would legally have to be write off the loan therefore reduce the the value of the loan book and therefore their own borrowing capacity???

(Any payments recovered in Bankruptcy or IVA are generally not considered as part of the loan book value !!) )

Where as by not accepting IVA's they may believe that most people wont go bankrupt straight away but would accept an informal arrangements even if its for only a few quid a month.

This way they could possibly keep the the loan book artificially high as it would not be a formal arrangement and not written off, and therfore keep their borrowing capacity high as its won't be accounted for as a bad debt.

I suspect that there is a very high chance of people who have been refused IVA by Northern Rock will accept and informal arrangements in the short term which suits NR as far as their loan book is concerned .

Let's face it There is a high chance that a large majority of these people will go bankrupt at some point in the near future and Investors are not stupid they probably realise that the share value of the company is artificially high.
The only mugs are us, the tax Payer!!!

half a loaf is better then no loaf at all! I think Mr Bransons veiw on IVA's would be more accomodating!

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