Virgin favourite for Northern Rock buy-out
The Virgin Group has emerged as the frontrunner to acquire beleaguered bank Northern Bank, following talks with all the bidders during the weekend.
The group, led by business tycoon Sir Richard Branson, will now move into detailed talks with Northern Rock and a merger could see the demise of the brand after being tainted by recent scandal.
Northern Rock’s marketing team, currently led by marketing director Andy Kuipers who has announced he will leave the company in January, could also be placed under threat as a result of the merger.
It is understood that Virgin’s offer includes an instant payment of £11 billion of the £25 billion Northern Rock owes the Bank of England, as well as injecting £1 billion in equity for a controlling stake.
Before the deal completes, it has to be approved by the Treasury Bank of England and the Financial Services Authority.
Should the acquisition be successful, Virgin boss Jayne-Anne Gadhia will takeover the running of Northern Rock.
Private equity groups JC Flowers and Olivant has also placed bids for the firm.
Northern Rock was forced to seek emergency funding from the Bank of England in September after running into difficulties due to turbulence in the world credit markets. In addition to Kuipers, Northern Rock chief executive Adam Applegarth and fellow directors David Baker and Keith Currie are also leaving the bank.
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