MSE News: Virgin Money to buy Northern Rock for £747m

pqrdef

So what does Branson want with a regional network of mortgage shops? Where is this going? None of the other demutualised building societies has survived as an independent bank. No significant regional bank has kept its independence either. It's not at all clear that there's a niche for this beast. I can see it being sold off and swallowed up within 5 years.

JuicyJesus

pqrdef wrote: »

So what does Branson want with a regional network of mortgage shops? Where is this going? None of the other demutualised building societies has survived as an independent bank. No significant regional bank has kept its independence either. It's not at all clear that there's a niche for this beast. I can see it being sold off and swallowed up within 5 years.

It gives Branson a customer base, employees, back office functions, banking systems and a branch network, which are very valuable things. Presumably these will be rebranded as Virgin Money, which will become a full-service bank.

He's got a bargain. I have no idea how much Metro Bank are investing in their startup, but by the time they get to NR's size no doubt it'll be a hell of a lot more than £747million. Good old Tories, selling off the family silver for a dirt cheap price again.

oldvicar

I just think that 747 is a lovely number - for an aeroplane. I can imagine the boardroom hilarity when this is the amount they decided to bid.

opinions4u

waveneygnome wrote: »

My concerns are though that Virgin bought a bank a couple of years ago....I think Church something something from a group of solicitors...in order to gain a banking license. From the outside, Virgin hasn't done much with that.

It would have been ideal to have the banking licence to set up his own bank. But NR already has one of those and is a hell of a lot cheaper than starting from scratch.

In addition, Virgin financial products are not known for low cost/good value. Their range of ISA's, life insurance etc all offer poor value compared to other players.

That should fit in well with high street banking then.

The Virgin One Account - a pioneer in offset mortgage markets - was sold by Virgin to RBS.......who swiftly upset many customers with there interest rate policy changes.

It was always an RBS product with a Virgin logo on it. When Virgin realised they couldn't make money out of it they backed out.

Branson has rarely been focused on short term profit. Increasing the value of the business is what he's about.

He'll sell before the end of the decade. For a large profit.

TREVORCOLMAN

It represents value for money and will increase choice on the high street for customers.

Value to who?

Ha ha - how much have the tax payer lost on this!


BBC business editor Robert Peston said the sale would see taxpayers end up with a "paper" loss of somewhere between £400m and £650m.

And they criticsied GB for selling gold cheap!

JuicyJesus

TREVORCOLMAN wrote: »

And they criticsied GB for selling gold cheap!

Well they have form... BT, British Gas, the rail system, CEGB, the various electric and water boards... I wonder how much money shareholders have made out of those over the past 20-odd years?

But the gold makes a nice Tory talking point though. Can't really get much more emotive than big evil Gordon Brown literally selling the country's gold.

opinions4u

JuicyJesus wrote: »

Well they have form... BT, British Gas, the rail system, CEGB, the various electric and water boards... I wonder how much money shareholders have made out of those over the past 20-odd years?

But taxpayers lost money with these businesses because they all lost money year after year when state owned. And don't tell me they offered wonderful service, becasue they didn't.

As profit making entities they've contributed to tax revenue.

In most cases prices to consumers also fell in real terms. (I'll accept rail fares would be a key exclusion to this).

They didn't sell off the family silver. They sold off the family crap.

JuicyJesus

opinions4u wrote: »

But taxpayers lost money with these businesses because they all lost money year after year when state owned. And don't tell me they offered wonderful service, becasue they didn't.

As profit making entities they've contributed to tax revenue.

In most cases prices to consumers also fell in real terms. (I'll accept rail fares would be a key exclusion to this).

They didn't sell off the family silver. They sold off the family crap.

I'm not going to claim that state-owned BG or BT were perfect (mind you private sector BT is hopelessly incompetent too) but in terms of what we got out of the deal we, the people, have been screwed over ever since.

Our utilities are run for profit. Why the hell should a water company, who I have no choice but to use the services of, and whose product is a basic essential for life with no differentiation between one person's supply or the next, be run for a profit? What benefit does that bring to the country as a whole? None - it benefits the shareholders in the water company and nobody else. They pay tax on the revenue - should it even be "revenue"?

Then think about energy companies. There is literally no differentiation between one company's supply or the other other than the price and the customer service offered when they are called. They all provide precisely the same product, coming through the same wire/pipe, only for a different price. How in the hell is that a healthy market? It isn't, it's a race to the bottom. Meanwhile energy companies make large profits, again on a basic essential for modern life.

Telecoms is even stupider. If it had to be privatised at all, the core network (now owned by Openreach) should have been kept government-owned and then access sold or leased to independent telcos at cost, with BT being just another telco alongside others leasing access to the same lines. The situation we actually had was that control of the whole POTS network in the UK was handed over to BT to do with as they saw fit, with Ofcom/Oftel only belatedly doing a half-a*sed job of implementing any separation by making BT split the infrastructure side into Openreach, who still remain wholly owned by BT and are therefore not independent. That isn't a fair market, as one of the major players also owns the basic infrastructure all the others use, and unless you're going to install expensive LLU equipment in every exchange it means your new startup telephone company's costs will be entirely at the whims of a subsidiary of your biggest competitor. (It wouldn't even be so bad if Openreach were halfway competent and the system itself wasn't utterly pitiful, but that's a story for another time.)

You're welcome to say I say all of this for ideological reasons, and that's partially true - mind you, nor am I a (totally) loony lefty who thinks everything should be government owned. But then all these industries were privatised, at least partially and probably mostly, not because it was the right thing to do or because it would make the country better off, but for ideological reasons; because of a deep-seated opposition to the concept of government or public sector intervention in the economy. In the event, a number of people got rich - early shareholders and backers. Those who couldn't afford to invest in shares in BT and BG and all the others, despite paying for their upkeep through taxation, never saw a penny, and instead got the pleasure (along with everyone else) of paying higher prices to accommodate profits and corporate taxes on a product they had no choice but to take anyway.

Like I say, I'm not a loony lefty or a communist and I don't think everything should be nationalised - certainly private industry has done us a great many favours and would be a terrible thing to lose, and the profit motive inspires a great deal of positive economic activity (and, if you look through my posting history, you'll see I'm hardly necessarily against big businesses, or businesses in general). But telecoms, energy, rail transport, buses, water... all of these are market failures. The market has delivered no real progress or ultimate benefit to consumers, with them instead being given a "choice" of numerous broadly equivalent products at wildly different prices, or simply no choice whatsoever - but either way money is siphoned off to pay for someone else's lifestyle. I feel this is wrong. Again, perhaps for ideological reasons. You can slate me for that if you like.

Also that was all a bit serious, so to liven things up, boingo boingo whoopsie knickers.

stclair

Mandelbrot wrote: »

From the article :
"Account access to remain the same – for now
Consumers can access their accounts in the near future, though this could change once the re-branding exercise happens next year."


???

I wonder how quickly this re-branding exercise is going to take place?

I was going to close my northern rock account however i`m tempted to keep it open now to see what offerings are going to be made

tagq2

JuicyJesus wrote: »

Why the hell should a water company, who I have no choice but to use the services of, and whose product is a basic essential for life with no differentiation between one person's supply or the next, be run for a profit?

In any other country, it would sound absurd: private businesses run the water systems and get to make a fixed amount of profit regulated by Ofwat... whaaat? One interesting thing did come out of this globally unique private arrangement: water companies can't cut off residential water supplies to inhabited properties. Since dysentery and other diseases you wouldn't associate with a glorious and progressive Thatcherite Britain were actually a problem in the late '80s thanks to local water authorities cutting off supplies in impoverished areas, I guess this was a deliberately delayed blow-softener.

differentiation between one company's supply or the other other than the price and the customer service offered when they are called.

In theory (i.e. the lame excuse is) the energy retailers would be competing to predict energy trends and buy in advance at the cheapest rate. In practice the retailers are the wholesalers and they don't care, except to (i) laugh at regulation which is supposed to keep the two ends at arms length; (ii) copy each other on everything, because low risk nearly guaranteed profit is best for most institutional investors (e.g. the occasionally wise French state, in the case of EDF). They're competing on who can provide the least pathological customer service and print the prettiest bills, then whine about their retail arms only making 1% profit.

Telecoms is even stupider.

It is still tedious to have to hear people commenting on how long the wait once was for a telephone line (yes, it was at worst 2-3 months in the '70s and it's often up to a month after 30 years of technological advancement). And the claim that a newly privatised BT promised to pave the streets with gold^Wfibre if only the government would sponsor them for half the money.

You're welcome to say I say all of this for ideological reasons, and that's partially true - mind you, nor am I a (totally) loony lefty who thinks everything should be government owned.

20 years after the fall of the USSR, it's weird how one can still feel obliged to say, "This doesn't mean I'm a pinko!" It's like people who argue against censorship on the 'net find themselves needing to say, "That doesn't mean I'm a pedo!" There are knee-jerk assumptions where unless you're totally one way it is assumed that you are completely the other: and not just ideologically pure but sinister.