Virgin buying Northern Rock

[FunnysInTheGarden]

so what do we think? I don't know the details, but did the government need to sell now for a fraction of the investment? Tis fair interesting

Hears Tossbourne say on the news

"It's great for the country,great for the High Street,and the Tax Payer nearly gets their money back"

just not sure whether Virgin is in it for the best motives. If they are in it to lend to first time buyers and new businesses then good, but if Richard B just wants to own a bank then bad.

Typical government, throwing tax payers money away because they can't be arsed with managing/running anything themselves.

I'm just greatful it's gone to a UK company, even if they company has put all it's cash overseas to avoid paying UK tax, 1 out of 2 ain't bad.

Given that the reaction of the Northern Rock employees has been positive, I think that has to be the starting point. The government could have held out until there was a better market but delaying might not have been good for the bank as a going concern. Virgin can start putting plans together to grow the bank rather than just keeping it in a holding pattern. Government track-records on managing anything are not stellar and cutting the taxpayers' losses on this relatively small bank may well have been the best option all round. Our investments in RBS and LLoyds are far higher than NR.

thats what I'm hoping Cogito. Mind you as with any sale who knows when the right time is. Provided NR starts lending again then it will have been a good move.

Hm. On the one hand, I do imagine that if anyone could turn it around, Richard Branson could, which is good. But, there is the issue as to the timing of the sale, and perceived confidence in the British economy - what Osbourne's effectively saying "well, the economy's screwed for now - this is as good a time as any to sell, but as well go for it".

Under the circumstances, I think we should be glad we're getting any money back at all. It was bloody stupid to bail out Northern Rock and set a very dangerous, and expensive, precedent which led to the government being obliged to bail out RBS and the combined Lloyds TSB / HBOS fiasco.

In saying that though, Mr. Osborne isn't giving us the full story. Shortly after Northern Rock was nationalised the business was split in two. One part would be the 'profitable' part of the business; the other part would consolidate all of the debts and toxic assets which brought the company to its knees in the first place. The second of these companies will never make a profit and will stay on the government books until our National Debt gets cleared, hanging around our necks like a dead albatross for all time.

The bit that has been sold, unsurprisingly, is the 'profitable' part of the business. There is no real risk to Branson in buying this and, under the circumstances, he's bought the bargain of the century. In better times, the government would have got a better price, but at the moment, I can understand them taking the money.

I'm just looking forward to them renaming their branches as 'Northern Virgins'!

To me it says the economy is screwed and if we hang on to this asset any longer it will be totally worthless. Really makes me hopeful for the future.

MrPants

The "bad bit of Northern" Rock is making money.

NRAM took over the majority of the old nationalised Northern Rock's mortgage book, which amounted to about £50bn.

The objective is to wind down the bad bank and so NRAM is closed to new lending.

However, it continues to provide services to some 540,000 existing borrowers, which breaks down to 365,000 mortgage customers and 175,000 unsecured loan customers.

NRAM was merged with the bad debts of Bradford and Bingley in March 2010, while the building society's better half went to Santander.

Unlike its good bank counterpart, NRAM is in the black - at least on paper.

The bad assets made a pre-tax profit of £291.5m for the first six months of 2011, compared with a £349.7m profit in the previous year.

Personally I was hoping that they'd sell it and either break even or a small profit for the taxpayer.

What I think this sale shows is that Osbourne is pretty convinced that in the short term, economic conditions will not improve. Let's face it, if you felt that next year you could sell them and make a healthy profit you'd hang on wouldn't you? The fact he's decided to take a small loss to me says things are going to get worse before they get better and may not improve before the next election.

Gives the lie to all the apologists for the banks who were claiming, when the original bail-out happened, that it was fine as the taxpayer would make their money back and then some.

The financiers and politicians have screwed us over again and again, and there's no sign of them stopping any time soon. Now they've moved on to overthrowing democratically elected governments and installing puppet regimes in Greece and Italy - composed of the same kind of bankers and economists who got us into this shit in the first place (in many cases, the same individuals, FGS).

I thought exactly what sue52 said. Not saying I understand it (Robert Peston totally confused me), but that was my gut reaction.