Branson: Nationalisation not right for bank

Nationalisation is “not the right answer” for Northern Rock, Richard Branson said today.

The head of the failed bid by Virgin for the beleaguered bank said the group had tried its best to save “Northern Rock and the jobs of the staff”.

Today’s announcement by the Treasury of a “temporary public ownership” of the bank marks the failure by Virgin to convince the Treasury that it could provide the best option for taxpayers.

In a statement, Richard said: ``We have tried our best to save the Northern Rock and the jobs of the staff.

“We put all the resources of Virgin’s senior management team on this for five months and we believe had a very strong proposal, an experienced team and one of Britain’s best brands.

“We believe nationalisation is not the right answer and that a commercial solution would have been the best way forward.”

He added that the bidding team would now put all their efforts into its existing Virgin Money operation.

“We wish the Rock and its staff the best of luck with the future,” he added.

Until today, Virgin Group was widely seen as the front-runner in the battle to secure troubled Northern Rock.

This position was confirmed when Richard accompanied Prime Minister Gordon Brown on a high profile visit to China in January.

The team was one of the first out of the stocks to register an interest and claimed an early victory in the takeover tussle by effectively gaining preferred bidder status.

Rival suitor Olivant was later put on an equal footing, but dropped out of the race earlier this month.

It left them in a two horse race with a bid put together by Northern Rock’s own management team.

Under the Virgin team’s plans, Northern Rock would be rolled into its financial services operation Virgin Money and rebranded as “Virgin Bank”.

If successful, the consortium planned to inject £1.3bn (€1.7bn) of new equity into Northern Rock.

Richard has previously said the group wished to retain the Newcastle-based lender “in its entirety” and grow the business rather than seeking a break-up of the group.

The team also indicated that it would not seek any material reductions in staff numbers and continue to operate the business from Newcastle and in the North East.

Virgin was joined in the consortium by New York investors WL Ross & Co, hedge fund Toscafund Asset Management and Hong Kong-based finance house First Eastern Investment Group.

A rescue of Northern Rock would have been a transformational deal for Virgin Money and given the business a key foothold in the mortgage market and an entry in savings.