| The British Government needs to offload Northern | | | | to be gearing up to mount a serious bid for the assets |
| Rock before the impending General Election. Northern | | | | of Northern Rock. The National Australia Group (NAG) |
| Rock was the first British financial institution to be | | | | are thought to be in good financial shape as they |
| taken over by the Government when the credit crunch | | | | employed a prudent risk policy during the boom times |
| started. The terms of the sale will mirror those of the | | | | and resisted the temptation to buy in readymade |
| Bradford & Bingley, the Deposits estimated to be | | | | growth in the form of bonds or low margin business, a |
| worth approximately £20billion and any | | | | strategy which is now paying dividends. |
| mortgage assets that are deemed to be "safe" or | | | | Both the Yorkshire Bank and the Clydesdale Bank |
| "good". The remainder of the assets which are | | | | have consistently been in a the mortgage best buys |
| deemed as "toxic" or "bad" will be retained by the | | | | charts over the last 12 months for Discount Variable |
| Government. | | | | Rate Mortgages, Current Account Mortgages and First |
| There are two main protagonists in this battle of | | | | Time Buyer Mortgages. Along with other banks such |
| financial institutions both of whom would benefit a | | | | as HSBC, First Direct and Barclays, NAG have been |
| great deal if they secure the acquisition of the | | | | able to cherry pick low risk customers and add to their |
| Northern Rock assets. There is a third contender in the | | | | asset base at good margins. |
| form of BBVA, a Spanish bank who are said to have | | | | NAG are also set to benefit from the European |
| a strong desire to replicate Santander's entry into the | | | | Competition ruling on the Lloyds TSB takeover of |
| British banking industry. It remains to be seen if their | | | | HBOS, as they look to buy up branches that the |
| intentions are serious. If they are they will need to be | | | | Lloyds Banking Group is being forced to sell. However, |
| quick. | | | | they won't get it all their own way as Tesco is |
| Virgin Money who missed out on buying Northern | | | | believed to be interested in many of the branches as |
| Rock first time around is seen as the front runner. I | | | | they are gearing up for the launch of their Tesco |
| suspect their bid will be chocked back considerably | | | | Money Shop. |
| and a lot closer to the real value of the company. In | | | | There is a strong case to support either of the |
| many ways they had a lucky escape by not being | | | | potential bidders, Virgin have their well known and well |
| able to reach an agreement first time round, as I doubt | | | | respected brand that should overcome the Northern |
| they would have accounted for the financial downturn | | | | Rock's association with starting the credit crunch in the |
| and the following recession being so severe. For 6 or | | | | UK. While NAG bring a lot to the table with their good |
| 7 years now Virgin has made noises about moving | | | | governance, their prudent approach to risk, past |
| into the mortgage market so there is a huge | | | | experience, existing processes and back office |
| motivation to get this deal done. | | | | infrastructure. |
| Mr Branson and Virgin Money have been very busy in | | | | It is difficult to tell who will eventually own Northern |
| the last fortnight as they have acquired Church House | | | | Rock; if Virgin make a solid bid above the market |
| Trust Bank. According to newspaper reports Branson | | | | value they should get it. NAG will not do business at |
| has also met with the investment company, | | | | any cost and therefore could lose out to Virgin. It will |
| Blackstone, to allegedly discuss the financing of a bid | | | | come down to who wants it most and who places the |
| for Northern Rock. Virgin Money has also re-entered | | | | most value on the acquisition in the context of their |
| the Best Buy Tables for unsecured personal loans. | | | | wider organisational ambitions. |
| They are also continuing to dominate the Best Buy | | | | The one thing I am 100% certain about is that both the |
| Tables for Credit Card Balance Transfer Deals as | | | | UK Government and the tax paying British public want |
| they have for the last two years. | | | | to get rid of Northern Rock sooner rather than later. I |
| However, the National Australia Group (NAG) who | | | | suspect that this issue will all be resolved no later than |
| own two very well known British banking brands in the | | | | the end of April 2010. |
| Yorkshire Bank and the Clydesdale Bank are also said | | | | |