Virgin is set to buy Northern Rock by Corina Ciubotaru

It may seem like an ordinary investment for them and a strange one for most people, but the Virgin company has decided to dive right into the financial market and buy itself a bank. They are determined to own Northern Rock, a traditional bank in the United Kingdom, which they will integrate into the Virgin Money brand. Northern Rock has been severely hit by the mortgage crisis sweeping the United States and customers have lost confidence in it, rushing to withdraw their deposits. The British government has tried to help it in its hour of need, by pouring $40 billion in its reserves, but it seems it was not enough to keep it alive enough for it to recover. The bank will be sold at a discount, or be nationalized, as no bidders agreed to pay the sum owned to the state as well as the bank itself. Right now, Northern Rock stock is worth 1 British pound and bidders include J.C. Flowers & Company, the U.S. private equity company Cerberus and Olivant Advisers of London, apart from Virgin. But it is only Richard Branson's company that came up with a detailed plan on how to save the bank, including repaying some of the debt in the beginning. Bidders exist, but it will ultimately be shareholders who are set to lose the most no matter what the decision is. In the meantime, customers' money is protected by pumping billions and Alistair Darling, Chancellor of the Exchequer, is taking most of the blame for the way things evolved at Northern Rock.

related story: http://uk.news.yahoo.com/rtrs/20071118/tbs-uk-auto-summit-ross-northernrock-03c9bed_1.html

by Corina Ciubotaru for PocketNews (http://pocketnews.tv)

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