Ed Balls has a good point, for once. The recovery may be slow, but it is happening and one would expect Northern Rock to be more valuable twelve months down the line. As it is, Virgin Money is picking up the part of Northern Rock which excludes the dodgy mortgages for at least £400m less than the government - that is, we taxpayers - have put in.
One explanation is that the Chancellor wants some ready money in a hurry, to finance some Keynesian measures to stimulate the economy or, worse, because JSA payouts are higher than anticipated. More likely is that the silver-tongued Richard Branson has persuaded Osborne that no other buyer, now or in the future, would promise to keep all the branches open and all the staff on the payroll for three years.
The remaining question is: how soon will it be before the Magpies display "Virgin" on their shirts, or will the sponsorship remain with the "bad" bank?
3 comments:
John Redwood is for the sale. That makes me feel better.
It turns out that the purchase is even cheaper for Richard Branson than first appeared. A third of the money is going to be extracted from Northern Rock itself: http://www.cnbc.com/id/45367643. The various ripping wheezes are going to leave the bank perilously lean. Matthew Oakeshott, the Liberal Democrats' city expert in the Lords, is not happy. He and Labour's Commons spokesman are putting down questions.
Meanwhile, Northern Rock Asset Management, the government-owned holder of the "toxic assets" continues to be profitable.
Post a Comment