Northern Rock - Richard Branson

#2
ABrighter2006 said:
Has Richard Branson got himself a bargain then?
What is it they say - the value of your investment may go down as well as up. If the taxpayers hard earned is repaid I couldn't care less who owns Northern Rock.

Jockster
 

Biped

LE
Book Reviewer
#4
Old Richie Rich steps into the breech once more. Good on the man I say!

It doesn't excuse this gobment for using our tax money to bail the b@stards out though.
 
#5
Northern Rock could prove to be a bargain for the bearded one if his intervention improves market confidence in it.
Northern Rock will cease to exist in it's current form and will be swallowed up by Virgin Money although it will retain it's stockmarket listing.
It looks as though most of the staff will be kept on and the HQ to remain in the North East. Back slapping and handshakes all round as we (the tax payer) get some of our money back straight away and lots of people are kept in employment and not dumped into the unemployment queues.

The only people that seem to be complaining about this at the moment are the hedge fund parasites that thought they could jump in when the shares were rock bottom and make a killing by offloading them once a buyout was in place.
 
#6
I'd hold your horses. It's not a done deal yet.
When Branson finds out that 'Northern Rock' aren't the indie band that won this year's Mercury prize he'll soon drop out.










(Edited, to up the share price of the word 'Northen' that lacked a second 'r'.
 
#7
As this appears to be a genuine Branson venture and not just something sporting a 'Virgin' label, I think Branson will make it work and work well.

Other than the good news Joe Public starts to get their money back, if Northern Rock just resumes it's slot, things are generally restored. IF however, Branson takes this as an opportunity to give the big four a real competitive run for their money, then banking could just be dragged into the 21st century as it should have been a long time ago.

I'm not referring to comparatively small gimmicks like an extra 1/4% on savings and 'free' banking if you stay in credit (and we'll go bananas with bollox charges if WE decide you aren't), but REAL service and REAL changes like 7 day banking (certainly 6 in the short term) FROM ACTUAL BRANCHES; branches OPEN to serve their customers 12 HOURS a day Mon-Fri (i.e. 8 to 8) instead of 9:30 to 4:30; cheque clearence SAME DAY, i.e. within HOURS, as in Scandinavia and not 5 to 7 to whatever days as with people writting in ledgers with quill pens; restoration of REAL branch mangers with REAL authority and not feckless addolessents who just reitterate whats written on a crib sheet which you might as well just read for yourself and save the time. And more......

British banks declared a profit of around £40 billion this year (£40'000'000'000). For illustration, that could cover the entire British defence budget, AND a 15% increase, and STILL leave BILLIONS profit.

No.9
 
#8
Who has watched the final scene of "It's a Wonderful Life" where Jimmy Stewart manages to halt a run on his town's bank by single-handedly restoring the trust and confidence of its savers? It's a useful illustration of capitalism and how the whole banking system (and even national economies), relies on the trust and confidence of lenders to remain viable.

I know much of this is teaching Granny to suck eggs but most businesses that fail are not 'bust'; they could be worth billions but just lack the cash to service their immediate debts. Many small businesses (some large ones too) invoice their debtors early and pay their creditors late to get round their cash flow problems. Northern Rock is owed billions of pounds by mortgage holders. However, it suddenly found itself unable to borrow enough money, under the usually affordable terms, to meet its short-term requirements because its normal lenders got cold feet following the sub-prime mortgage lending fiasco in the USA. This situation was exacerbated by a frenzied UK media campaign that whipped up the fears of its savers and led to a run on its liquid funds; the ultimate self-fulfilling prophecy.

The whole point of building societies and banks is to make money for their shareholders and savers from the interest they earn by lending money for mortgages or other purposes. If too many of their depositors try to withdraw their money at the same time, there will not be enough to pay them (cos most of it's been lent to self-same mortgage holders and other borrowers). When other sources of cash dry up unexpectedly, you end up with a Northern Rock but it could just as easily be any one of the other banks or building societies.

Northern Rock is ripe for the picking owing to its enormous 'book' of outstanding mortgages. Think of all those re-payments that will be coming in as a guaranteed income stream over the next 20-25 years. All it needs is for the trust and confidence of its savers (and other lenders) to be restored so they start putting their money back in, just like "It's a Wonderful Life." The reputation of Richard Branson and his Virgin brand is probably enough to achieve this. As things stand, the Government is probably the only other show in town with sufficient stability and clout to pull it off but this means everything being underwritten by the taxpayer, and nationalised organisations are not that well known for their business competence.

I haven't looked at Richard Branson's books but, unless another household name comes along, he can probably make Northern Rock viable again, albeit under the name of Virgin Finance or Virgin Money. Northern Rock is not a 'black hole'. Most of the money is there but it is tied up in mortgages and other loans. If all those panicking savers who withdrew their money from Northern Rock put it back today, the taxpayers would probably get most of their money back without any further intervention, but this isn’t going to happen. If Branson takes over Northern Rock, the taxpayer will get some money back now but more will come later. The trick will be to make sure it is ALL paid back. This should be possible unless we get into a serious negative equity situation with house prices falling and mortgage holders reneging on their re-payments. As long as the media doesn't stoke up unfounded fears again and make more self-fulfilling prophecies of doom, Branson should be able to pull Northern Rock's chestnuts out of the fire.

One thing for certain, the name of Northern Rock will remain tarnished forever. Such a pity as it was basically a good company; it just got unlucky and wasn't helped by a hysterical media and the Government's shilly-shallying and inept attempts to restore confidence in it (as if the current Government can instill confidence in anything these days). But let's be grateful the rot stopped with Northern Rock despite the media's attempts to raise fears about other financial institutions. Otherwise, we would all have suffered. At least our savings, pensions, mortgaged houses, businesses, etc., are safe for the time being. Keep the faith, brothers and sisters!

(Edited cos I left out the final paragraph)
 
#9
ABrighter2006 said:
"Remember the value of your investment may plummet as well as fall".
dunno about that, but i'm tracking NR on barclays, two people have made at least £100k this morning by selling at 122p....nice work if you can get it!
 
#10
Dunservin:
Who has watched the final scene of "It's a Wonderful Life" where Jimmy Stewart manages to halt a run on his town's bank by single-handedly restoring the trust and confidence of its savers?
With respect, I'd keep off the laughing gas if I were you.
As a man once nearly said,
"Sir, I knew James Stewart and you, Richard Branson, are no James Stewart." :D

This one's bigger than him. Its closing in on Barclays and CityCorp as well.
 
#11
goodkurtz said:
I'd hold your horses. It's not a done deal yet.
When Branson finds out that 'Northen Rock' aren't the indie band that won this year's Mercury prize he'll soon drop out.
Err...
Sir Richard has also guaranteed "pretty well all" of Northern Rock's 6,000 jobs, which are predominantly in key Labour seats in the North East.
Sir Richard Branson set to buy Northern Rock
 
#12
Ex_ex said:
goodkurtz said:
I'd hold your horses. It's not a done deal yet.
When Branson finds out that 'Northen Rock' aren't the indie band that won this year's Mercury prize he'll soon drop out.
Err...
Sir Richard has also guaranteed "pretty well all" of Northern Rock's 6,000 jobs, which are predominantly in key Labour seats in the North East.
Sir Richard Branson set to buy Northern Rock
Only when the Parker pen scratches the parchment can the deal be said to be done.
 
#13
This from the Telegraph posted by Ex ex:

Virgin's business model is to build brands and license them, taking an annual fee – often a portion of turnover.

The brand rights alone cover all the central costs, with some left over, Sir Richard told The Daily Telegraph recently.

The model has allowed Sir Richard, who defines Virgin as "a way-of-life brand", to expand his empire without tying up lots of capital.

Virgin has created more than 200 branded companies worldwide, employing around 50,000 people, in 29 countries – covering a range of sectors including mobile phones, transport, travel, financial services, leisure, music, holidays, publishing and retailing.

Virgin's website claims that: "All the markets in which Virgin operates tend to have features in common: they are typically markets where the customer has been ripped off or under-served, where there is confusion and/or where the competition is complacent."

It adds: "Contrary to what some people may think, our constantly expanding and eclectic empire is neither random nor reckless. Each successive venture demonstrates our skill in picking the right market and the right opportunity."
There in lies the rub. Virgin is a branding operation. It rejuvenates and regenerates business by lending its name. It is the comforting hand that one can hold when stepping into unknown waters.

If Northern Rock's problems were it's own fault then yes such a re-branding exercise could very well work to restore confidence. But NR is buffeted by storms from else where. So re-branding is just sticking lipstick on a pig.
 
#14
Dunservin said:
...Think of all those re-payments that will be coming in as a guaranteed income stream over the next 20-25 years. All it needs is for the trust and confidence of its savers (and other lenders) to be restored so they start putting their money back in, just like "It's a Wonderful Life." The reputation of Richard Branson and his Virgin brand is probably enough to achieve this.

... If Branson takes over Northern Rock, the taxpayer will get some money back now but more will come later. The trick will be to make sure it is ALL paid back. This should be possible unless we get into a serious negative equity situation with house prices falling and mortgage holders reneging on their re-payments. As long as the media doesn't stoke up unfounded fears again and make more self-fulfilling prophecies of doom, Branson should be able to pull Northern Rock's chestnuts out of the fire.

One thing for certain, the name of Northern Rock will remain tarnished forever. Such a pity as it was basically a good company; it just got unlucky and wasn't helped by a hysterical media and the Government's shilly-shallying and inept attempts to restore confidence in it (as if the current Government can instill confidence in anything these days). But let's be grateful the rot stopped with Northern Rock despite the media's attempts to raise fears about other financial institutions. Otherwise, we would all have suffered. At least our savings, pensions, mortgaged houses, businesses, etc., are safe for the time being. Keep the faith, brothers and sisters!

(Edited cos I left out the final paragraph)
My bold. I wouldn't disagree with many of the points you make DS, but I question a couple of them (emboldened).

Yes, the Pensions industry and capitalisation funds welcome the fixed income that CDO's offer over the lifetime of the mortgage book. The difficulty for observers is not knowing what percentage of Risk on the mortgage book has been made over the last five years, by the outgoing Northern Rock principals, and the complexity of the Risk Model used (in line with the FSA guidelines / Basel 2).

As the UK house market has just seen it's second drop in two sucessive months, it may not mean the start of a recession, but Northern Rock's mortgage book is worth less now than it was when this crisis started.

I can't see how you can say that it was basically a good company - it's actions might well have been legal, but by definition a high risk strategy of raising funds from the world credit markets through a complex set of instruments, at a time when the US sup-prime market is struggling was always going to carry a high risk factor, which has been reflected by Fitch and others in their ratings of similar organisations. Ultimately, poor cash flow, for a variety of reasons, has resulted in the headlines of the last few months.

Yes, they were "unlucky" - and Branson, may well head one of the few cash rich and able organisations that can make the business work again, but whatever losses are made on the mortgage book now, will be reflected in the repayment to HM Treasury of the public funds used so far, to prevent a total run on the bank.

It would be interesting to understand why HM Treasury does not offer a similar underwriting to shortages in the MOD cash flows? My guess, is that the reputation of the British economy and British Jobs are worth more than any number of dead / injured service pers and the many areas of MOD underfunding discussed on these boards.
 
#15
Benefit as I see it is that he will be able to buy at fire sale price. This will give cause for further attack on the crap Gubmint as with Quinitique. Sooner or later will come the straw that is associated with back of a camel.
 

AlienFTM

MIA
Book Reviewer
#16
I reckon Branson is making a shrewd, wise move.

I think it will lead to a rebranding of Newcastle Untied shirts just in time for Christmas. It is the only time you'll ever see 50,000 Virgins and a wise man in Newcastle at Christmas.

I was laughing at Newcastle as they were humiliated by Liverpool on Saturday. Didn't expect to get it back in No Trumps from Everton a couple of hours later.

Bugger.
 
#17
Pretty much everything the guy touches turns golden.

Good luck to him, as long as the money our government gave to bail NR out gets paid back, then lve no issues whatsoever.

Wait until everything settles, l might MIGHT just invest in NR/Virgin.

Could take time, but in 5 -10 years may prove too be a shrewd move me thinks
 
#18
AB2006 - VMT for your informative response. I'm still trying to make some sense out of all this and hope that it doesn't foreshadow further financial woes like the 'r' word. Having been raised with the ethos of living within my means (reinforced by the Services' dim view of anyone falling into debt), I am worried enough that my kids are starting life with the millstones of student loans around their necks. However, I find today's revelation that the average Brit owes £33k horrendous. Living on credit is a risky business at the best of time but when they start calling the loans in...

Mind you, there is always this adage attributed to J Paul Getty:

If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem.
Or the Government's?
 
#19
MAD_FERRET
Pretty much everything the guy touches turns golden.
He was lucky in the beginning. He released Mike Oldfield's 'Tubular Bells' and bought up the Sex Pistols.
But that didn't take genius. He only picked up the fortunes that the dumb clucks couldn't see.

To his credit he has managed to make a success of an air line business. Which is pretty incredible. The air line biz is the grave yard of many a competent entrepreneur. And he has a special gift. He knows how to source the right people and delegates well.
(He is nothing if not the 'Delegater par Excellent'! That's why he keeps smiling, he leaves other brows to become furrowed.)

But he wasn't as good as Mussolini on the train front. And he doesn't hold the key to a malaise besetting the world banking system.
He's a successful player, but he didn't invent the game.
 
#20
Great benefit. Acquire at knock down price. Change name. Move equity to shady offshore tax haven with all the other Virgin businesses. Continue to smile and grin, wearing naff jumpers, whilst laughing all the way away from paying the tax man anything. But expecting him to keep those loans going so profit can be maximised.


It would be enough for me to take my money out of Northern Rock. If I had any money, and if it were in Northern Rock.
 

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