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

edited 17 November 2011 at 3:17PM in Budgeting & Bank Accounts
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MSE_GuyMSE_Guy MSE Staff
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edited 17 November 2011 at 3:17PM in Budgeting & Bank Accounts
This is the discussion thread for the following MSE News Story:

"The Government is selling Northern Rock to Virgin with the hope the combined forces will bring High Street competition ..."
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  • short_birdshort_bird Forumite
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    Were Virgin Money going to buy the whole of Northern Rock in 2007, including the "toxic loan" department? It would be interesting to speculate on what would have happened if they had bought the whole kit and caboodle.
    Cancel the kitchen scraps for lepers and orphans, no more merciful beheadings, and call off Christmas.
  • JimmyTheWigJimmyTheWig Forumite
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    Surely the good part of Northern Rock is worth more than that, isn't it? Sounds like a steal to me, at under a £billion.
  • ses6jwgses6jwg Forumite
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    Northern rock is pretty competitive at the moment anyway for savings and mortgages, but Virgin money could bring something to the party with its personal finance arm (credit cards and loans)
  • How safe is Virgin Money?

    Do the credit rating agencies think there is more or less of a chance of depositors needing to call on the FSCS to guarantee savings in Virgin (when the purchase has gone through) than, say, Nationwide BS.
  • Bernard_ColeslawBernard_Coleslaw Forumite
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    Surely the good part of Northern Rock is worth more than that, isn't it? Sounds like a steal to me, at under a £billion.

    Ironically, the 'good' part of NR is actually loss-making at the moment. They have lots of savings on the balance sheet (on which they have to pay interest) but this isn't yet matched by a similar value of loans (on which they can charge interest). So the 'good' bank has been making hefty losses so far.

    Conversely, the so-called 'bad' bank, Northern Rock Asset Management, has all of the pre-existing mortgages and loans and has been turning in some pretty decent profits in recent years. This bit will remain owned by HMG, i.e. you and me, for the forseeable future.

    Of course, this little bit of detail hasn't been widely reported, hence we get the "How dare they sell Northern Rock at a loss" outrage. :D
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  • JimmyTheWigJimmyTheWig Forumite
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    I take your point, Bernard, but the good part is safe and has the basis to become profit making. That's why I think it's worth twice what they're paying.

    The bad bit is likely to start to lose money when the debtors start to default. A toxic debt is only loss-making when it stops being paid. Which is likely to happen.
  • waveneygnomewaveneygnome Forumite
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    I wish the new bank luck, and hope that the Virgin brand will bring a new force to high street banking.

    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.

    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.

    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.

    Virgin launched a Cancer Insurance policy a while back....and I don't think it sold too many policies.

    I think that customers are more savvy now and can't be dazzled by the brand name - Virgin will need to deliver good, solid, competitive products if they are to make a real impact on the high street.
  • ChiefGrasscutterChiefGrasscutter Forumite
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    I take your point, Bernard, but the good part is safe and has the basis to become profit making. That's why I think it's worth twice what they're paying.
    .

    Well as I recall the government was not exactly submerged in bidders for it.
    Virgin was about the only serious bidder.
    There were some others who expressed a vague interest but never followed through.

    If it worth twice as much as they sold it for one has to ask where were all the bidders willing to top Virgin's price?
    If you have only one bidder you really don't have any option - other than not to sell - and as many have said HMG should not be in the business of running banks etc.
  • MandelbrotMandelbrot
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    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."


    ???
  • chardirchardir Forumite
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    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."


    ???

    Yikes, I hope they don't really mean that :eek:
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