Virgin of the Rock
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.
He 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No deal will take place with any bidder, Virgin or anyone else, if all the government support were to be withdrawn immediately on completion of the deal.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.