Branson comes to Northern Rock’s aid
TEXT OF STORY
Doug Krizner: It’s been a month since the subprime-mortgage monster took a bite out of Britain’s Northern Rock. This morning, the Times of London reports U.K. billionaire Sir Richard Branson may play the white knight and rescue this mortgage company from deep distress. We have more from Kyle James.
Kyle James: The Times says the Virgin Group is in talks with investors from the U.S. and the Middle East over putting together a cash injection for Northern Rock. In exchange, they would get a controlling stake in the troubled bank.
If the deal goes through, Northern Rock would become part of the Virgin Money brand, which would take over the day-to-day management.
Analyst James Hamilton with Numis Securities in London says Northern Rock is a good fit for Virgin Money, currently on an expansion course:
James Hamilton: Virgin Money isn’t really a player in the U.K. mortgage market. And in the first half of this year, Northern Rock’s net market share for U.K. mortgages was 19.5 percent. It was a very big player.
Virgin is not Northern Rock’s only suitor, though. At least two private-equity funds, JC Flowers and Cerberus, have expressed interest in the British bank. The Northern Rock refinancing package could top $50 billion.
I’m Kyle James for Marketplace.
Stories You Might Like
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
