Northern Rock sold to Virgin Money

Graham_Devon

Northern Rock is being sold to Virgin Money for £747m, the government has announced.

The bank was taken into public ownership in 2008 when it got itself into financial difficulty as a result of the turbulence in the global financial market.

The government subsequently split the bank into two, Northern Rock plc, and Northern Rock (Asset Management), into which was placed its bad debt.

Virgin is buying Northern Rock plc.

Chancellor George Osborne said: "The sale of Northern Rock to Virgin Money is an important first step in getting the British taxpayer out of the business of owning banks.

"It represents value for money, will increase choice on the High Street for customers, and safeguards jobs in the North East."

Not sure what to make of it at the moment.

michaels

I guess the big question is what is the net position for the taxpayer?

Graham_Devon

michaels wrote: »

I guess the big question is what is the net position for the taxpayer?

I guess it's difficult to tell with the bank split before the sale. We still hold all of the risk.

HAMISH_MCTAVISH

Graham_Devon wrote: »

We still hold all of the risk.

And the bit that is actually making money.;)

Graham_Devon

HAMISH_MCTAVISH wrote: »

And the bit that is actually making money.;)

Disingenuous much?

Graham_Devon

Just read more. The £747m is half what it cost us just in the last year to keep Northern rock going.

About £1.4bn of the total £27bn loan was used to support Northern Rock plc and turned into equity after the split last year. Its first-half figures, published on Wednesday, show this loan has now fallen to £1.1bn as losses eat into the equity.


The City had been using £1.4bn as a starting point for any bid but Sandler stressed that the price fetched from the sale could not be looked at in isolation in assessing returns to the taxpayer, and argued that the repayment of the rest of loan by NRAM needed to be considered when assessing whether taxpayer had got all their money back.

Thrugelmir

HAMISH_MCTAVISH wrote: »

And the bit that is actually making money.;)

but still owes the taxpayer £21 billion pounds and has an £85 billion mortgage book to unwind.

kabayiri

Thrugelmir wrote: »

but still owes the taxpayer £21 billion pounds and has an £85 billion mortgage book to unwind.

The considered wisdom spouted forth on here was that the state investment in our banks would show profit. Was this just more spin ?

The taxpayer owns 83% of RBS. How will their plans to sell off the branch network affect the value of the company as a whole ?

ninky_2

more of an ideological sale I'd say.

Heyman_2

Peston's analysis -

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 completition 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.

Good bit of overall business by our wonderful politicians there, then. :eek:

So much for this -

Gordon Brown: Bailed-out banks must 'pay back every penny'
http://www.thisislondon.co.uk/standard/article-23809504-gordon-brown-bailed-out-banks-must-pay-back-every-penny.do

Thrugelmir

ninky wrote: »

more of an ideological sale I'd say.

What do Politicians know about running banks?

Days are gone of when MP's had career experience of anything useful.