Government to sell Northern Rock to Virgin Money

[Gromit]

Not a great time to be selling. Fire sale perhaps?

[factor-fiction]

http://www.theanswerb.../Question1076826.html
A thread on the same point started earlier

[emmie]

someone already covered this but why not, he offered before remember?

[rov1100]

If he had sold at a profit you would get the claims how wise the Labour party was in raising a failed company from the ashes which was what they intended.

[jno]

Branson has promsed to shake up the banking sector with Virgin's innovatory techniques. Sounds like it will be as big a success as VirginCola and Virgin Vie cosmetics.

[BertiWooster]

'' Virgin Vie '' What the heck was that ?

Which highlights your point ,doesn't it jno ?

[DTCwordfan]

I think it is a very good time to sell it.

Congrats to Osbourne and the Treasury.

(i) the deal includes a perfomance kicker that could net back some extra £250 mln - there is also some financial instrument that closes the so-called gap by 200 mln too - the intricacies of that I have not read in detail.

(ii) Northern Rock is off their books and management time

(iii) Richard Branson will go for aggressive growth as he enters the mortgage market and a good fit to his other products - this will create growth, staff employment and hence reduction of JSAs and the generation of taxes and VAT on the use of that income

(iv) he will provide a "foil" to the stodgy banks to get lending in the market, both to mortgagees and small business. That too helps kick-start further growth and that means extra taxes and benefits - way in excess of the current financing position

(v) it helps underpin some extra money for leveraging further growth in the economy and job reduction....financing of "get-out-of-unemployment" for youth - there may be a little more in his budget as I did not the other day our GDP to debt ration is now beneath (just) that of Germany and France...but not as low as the States, Canada or Japan. Even a half percent release (keeping up the pressure elsewhere to reduce) would generate substantial growth opportunity investment.

It makes a lot of sense.

[jake-the-peg]

The impression given is that this was sold to Richard Branson in a rather informal "over a pint" sort of way.

I'm sure that's not literally true but I think we should know what efforts were made to find other potential bidders and get the best price for the country.

Also the calculations behind determining that this was the best time to sell.

Until I see that I don't think I could comment on how good a deal this is.

I do know that Northern Rock has cost us £21 Billion and we're looking at a $20 Billion loss so forgive me if I don's start dancing quite yet

[jno]

good question, Berti... wikiing reveals that the management bought it out from Virgin, renamed it Vie At Home, and now specialises in direct selling

http://www.vieathome.com/

which would explain why it is not as well known as it might be. Not a great Branson triumph, then. (Though it is evidence of his willingness to try everything except incest and folk dancing.)