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Virgin Money acquires Northern Rock
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Author:  ROBINSON [ Thu Nov 17, 2011 10:15 am ]
Post subject:  Virgin Money acquires Northern Rock
http://www.virgin.com/money/news/virgin ... thern-rock

This has been in the pipeline for a good while now, but a deal has just been formally announced.

Personally I think it's great that it's back in private hands after the previous government's chest beating exercise (or essential actions, depending on your beliefs), and even better that an effective new bank has been created, which should help to break the stranglehold some of the big banks have right now.

This, to me, is the deal that should have been done with RBS's sale of it's Williams & Glyns network.
http://www.virgin.com/money/news/virgin ... thern-rock

This has been in the pipeline for a good while now, but a deal has just been formally announced.

Personally I think it's great that it's back in private hands after the previous government's chest beating exercise (or essential actions, depending on your beliefs), and even better that an effective new bank has been created, which should help to break the stranglehold some of the big banks have right now.

This, to me, is the deal that should have been done with RBS's sale of it's Williams & Glyns network.
Author:  Mintball [ Thu Nov 17, 2011 10:18 am ]
Post subject:  Re: Virgin Money acquires Northern Rock
You'd presumably rather it had gone under, then, with the concomitant job loses etc?
Author:  ROBINSON [ Thu Nov 17, 2011 10:22 am ]
Post subject:  Re: Virgin Money acquires Northern Rock
No of course not. I'd have preferred it to be acquired by either private equity (essentially what Virgin Group is) or it raised money through foreign investment, like Barclays did. That could have been done straight away without the need for the government to turn it into one of their departments.

Whatever the rights or wrongs, anyway, this deal has turned out good. According to Virgin, the government will receive £747m immediately, another £50m within months, and a potential £1bn following flotation within five years. And lets face it, we could do with the money.
Author:  McLaren_Field [ Thu Nov 17, 2011 10:22 am ]
Post subject:  Re: Virgin Money acquires Northern Rock
Quote:You'd presumably rather it had gone under, then, with the concomitant job loses etc?


It would only have affected pensioners and geordies, non-contributors to the economy as they are they don't count.
Author:  Chris28 [ Thu Nov 17, 2011 10:26 am ]
Post subject:  Re: Virgin Money acquires Northern Rock
ROBINSON wrote:No of course not. I'd have preferred it to be acquired by either private equity (essentially what Virgin Group is) or it raised money through foreign investment, like Barclays did. That could have been done straight away without the need for the government to turn it into one of their departments.


Genuine question, as I don't know the answer, but which private and/or foreign investors were looking to invest/take over UK banks at the time?
Author:  tb [ Thu Nov 17, 2011 10:32 am ]
Post subject:  Re: Virgin Money acquires Northern Rock
ROBINSON wrote:No of course not. I'd have preferred it to be acquired by either private equity (essentially what Virgin Group is) or it raised money through foreign investment, like Barclays did. That could have been done straight away without the need for the government to turn it into one of their departments.

Whatever the rights or wrongs, anyway, this deal has turned out good. According to Virgin, the government will receive £747m immediately, another £50m within months, and a potential £1bn following flotation within five years. And lets face it, we could do with the money.



So around a £700m loss? Yep, a great deal.
Author:  ROBINSON [ Thu Nov 17, 2011 10:33 am ]
Post subject:  Re: Virgin Money acquires Northern Rock
Chris28 wrote:Genuine question, as I don't know the answer, but which private and/or foreign investors were looking to invest/take over UK banks at the time?


If you're looking for foreign banks on the acquisition trail, then you only have to look at Santander who've hoovered up pretty much everything over here, including RBS's Williams & Glyns network. Also National Australia Group (owners of Yorkshire and Clydesdale) aren't short of cash either.

However investment doesn't have to come in the form of being 'bought out', as I understand it. Barclays raised money through share issues and by restructuring its own book (I believe). As for the investors involved, these are usually private equity houses, such as the Virgin's partners in the Northern Rock deal.

My only problem, really, with the whole Northern Rock thing is that Virgin were there at the beginning, and if the government had just thought for one second, they wouldn't have had to nationalise it, as Virgin were already in the frame to buy it. They had the money, the business plan and everything - we know this because they had done most of the legwork in their bid to buy Bradford & Bingley. The government were a bit like a bull in a china shop on this one.
Author:  ROBINSON [ Thu Nov 17, 2011 10:35 am ]
Post subject:  Re: Virgin Money acquires Northern Rock
tb wrote:So around a £700m loss? Yep, a great deal.


So you agree with the Daily Mail, then? There's a turn up!

http://www.dailymail.co.uk/news/article ... ocket.html

On a serious note - by 'good' I meant that the outcome is as good as can be expected. The Labour government massively overpaid for the business, and at least this way, the current government and at least get some money in.

Therefore, it's good.

However as I said in my previous post, had the Labour government allowed Virgin to talk to them and Northern Rock instead of wading in like they did, then this loss wouldn't have happened, would it?
tb wrote:So around a £700m loss? Yep, a great deal.


So you agree with the Daily Mail, then? There's a turn up!

http://www.dailymail.co.uk/news/article ... ocket.html

On a serious note - by 'good' I meant that the outcome is as good as can be expected. The Labour government massively overpaid for the business, and at least this way, the current government and at least get some money in.

Therefore, it's good.

However as I said in my previous post, had the Labour government allowed Virgin to talk to them and Northern Rock instead of wading in like they did, then this loss wouldn't have happened, would it?
Author:  Mintball [ Thu Nov 17, 2011 10:46 am ]
Post subject:  Re: Virgin Money acquires Northern Rock
McLaren_Field wrote:It would only have affected pensioners and geordies, non-contributors to the economy as they are they don't count.


Well indeed.
Author:  tb [ Thu Nov 17, 2011 10:50 am ]
Post subject:  Re: Virgin Money acquires Northern Rock
Many commentators have pointed out the loss: through, admittedly, Robert Peston has it slightly smaller than £700m

Quote:BBC business editor Robert Peston said taxpayers had injected £1.4bn into Northern Rock plc.

He added that in addition to the immediate £747m the government will get back following the completion of the sale, there is the potential for the Treasury to receive a further £280m over the next few years.

"So on paper, taxpayers end up with a loss of somewhere between £400m and £650m," said our business editor.


http://www.bbc.co.uk/news/business-15769886

Oh, and on the bit of Northern Rock which we still own and the taxpayer is still liable for (the bit with the 'toxic' assets)

Quote:The size of the losses contained in the bad bank part of Northern Rock are still uncertain, but could amount to as much as £21bn.


tbh, you and Gideon hailing this as good business (and blaming the previous government when the flies in the ointment are pointed out) is simply one of the clearest examples going of the triumph of ideology over judgement.
Many commentators have pointed out the loss: through, admittedly, Robert Peston has it slightly smaller than £700m

Quote:BBC business editor Robert Peston said taxpayers had injected £1.4bn into Northern Rock plc.

He added that in addition to the immediate £747m the government will get back following the completion of the sale, there is the potential for the Treasury to receive a further £280m over the next few years.

"So on paper, taxpayers end up with a loss of somewhere between £400m and £650m," said our business editor.


http://www.bbc.co.uk/news/business-15769886

Oh, and on the bit of Northern Rock which we still own and the taxpayer is still liable for (the bit with the 'toxic' assets)

Quote:The size of the losses contained in the bad bank part of Northern Rock are still uncertain, but could amount to as much as £21bn.


tbh, you and Gideon hailing this as good business (and blaming the previous government when the flies in the ointment are pointed out) is simply one of the clearest examples going of the triumph of ideology over judgement.
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