Virgin has 'best bid on the table' for Northern Rock

Virgin boss Richard Branson said today he believed he had “the best bid on the table” for the ailing Northern Rock bank.

Virgin boss Richard Branson said today he believed he had “the best bid on the table” for the ailing Northern Rock bank.

Branson, speaking in Shanghai where he is accompanying British Prime Minister Gordon Brown’s official visit to China, said he was confident he had a “winnable package” to see his bid succeed.

His comments come as British Chancellor Alistair Darling prepares to unveil a new package on Monday of further government money to support a private buyer for the stricken bank.

Mr Brown is understood to have accepted a plan drawn up by bankers Goldman Sachs to convert the billions of pounds lent to the bank by Northern Rock into bonds.

The bonds – guaranteed by the government rather than a private sector insurer - would be sold off in small parcels to international investors every few months.

It could mean the Treasury funding Northern Rock to the tune of billions of pounds for up to five years, even if it remains in the private sector.

Asked if he had had any talks with Mr Brown about a possible deal, Branson said: “We haven’t had any detailed discussions with the prime minister.

“I’m still confident that our bid is good. And I personally believe it’s the best bid on the table, it’s the best option for Northern Rock.

“I believe it’s the best option because we would re-brand it the Virgin Bank, which is a very strong brand.

“We have got the best capitalisation plan for the bank and we have got a great management team.

“We feel we have a winnable package.”

He added: “What’s pleasing is that Goldman Sachs has a package which they believe works and I believe they have talked to our team and we are in initial discussions but our initial reactions are that there is a way forward and we are looking forward to getting into detailed discussions with them in the next couple of days.”

Asked if any Chinese investment would be involved in his bid, Branson said: “There’s always a possibility of Chinese investment money – they have deep pockets at the moment.

“We have certainly got a small amount of Hong Kong money in our proposition but principally it would be British-backed and very much a British bank.”

Robin Ashby, head of the Northern Rock Small Shareholders Group, welcomed the loans-into-bonds proposal but said he expected shareholders would reject Branson’s bid.

He told Sky News: “If it’s true, it’s very good news.

“It enables the company to carry on in the way that we want to see it carry on, as an independent company based here in Newcastle-upon-Tyne with good quality jobs and supporting the Northern Rock Foundation.”

There was little chance, however, that shareholders would accept Branson’s proposal, Mr Ashby said.

“It sets the scene for a private sector solution, not Mr Branson’s solution, I must say, because talking to shareholders I cannot see any way that they are going to support him and his proposal to take over 55% of their company after they’ve put in more money.”

Liberal Democrat Treasury spokesman Vince Cable denounced the Goldman Sachs plan as a “complete sell-out”.

He accused ministers of being prepared to put taxpayers’ money at risk in order to avoid the “embarrassment” of having to nationalise the bank.

“It looks at first sight, if the story is true, that the taxpayer is being comprehensively shafted,” he told BBC Radio 4’s The World Tonight.

“The government will be completely underwriting this company, it will be carrying all the risks. It will have effectively nationalised the liabilities of the bank but not the assets.

“A private buyer will come in – probably Richard Branson, we don’t know - buying the company for a very small sum and able to make an enormous amount out of it while all the risks are being carried by the government.

“There is no guarantee that the taxpayer is going to get its money back, certainly over a reasonable period of time.”

More in this section

Budget 2022 Logo

What impact will this  year's budget have on you and your business.

The Business Hub

News and analysis on business, money and jobs from Munster and beyond by our expert team of business writers.

Sign up
Puzzles logo

Puzzles hub

Visit our brain gym where you will find simple and cryptic crosswords, sudoku puzzles and much more. Updated at midnight every day. PS ... We would love to hear your feedback on the section right HERE.

News Wrap

A lunchtime summary of content highlights on the Irish Examiner website. Delivered at 1pm each day.

Sign up

Our Covid-free newsletter brings together some of the best bits from, as chosen by our editor, direct to your inbox every Monday.

Sign up