U.K. banks on Sir Branson rescue

Stephen Beard Nov 26, 2007
HTML EMBED:
COPY

U.K. banks on Sir Branson rescue

Stephen Beard Nov 26, 2007
HTML EMBED:
COPY

TEXT OF STORY

Doug Krizner: The troubled British mortgage lender Northern Rock has been looking for a knight in shinning armor. And it may have found it in Sir Richard Branson. From London, Stephen Beard reports on a rescue from the jaws of the global credit crunch.


Stephen Beard: The British government says it favors the Virgin consortium’s bid for Northern Rock. And what the government says matters. It’s poured $50 billion worth of public money into the Rock since the summer.

The Rock crumbled after world credit markets dried up, triggering the first bank run in Britain for a century. Branson and his partners are promising to pay off almost half the $50 billion now, and the rest over three years.

Analyst David Buick says the government’s hoping for a swift end to this damaging crisis:

David Buick: When London’s reputation as the leading financial center of the world was at its best, this has been a catastrophic embarrassment. It’s been grossly, badly handled, it’s been allowed to fester for far too long.

But the crisis isn’t over yet. Northern Rock’s shareholders must approve the Branson takeover. If they don’t, the government could be forced into the even bigger embarrassment of nationalizing the bank.

In London, this is Stephen Beard for Marketplace.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.