Hey reader!Founded by Richard Branson, Virgin Group subsidiary Virgin Money bought out Northern Rock plc for £747million from the government.
I had to go into this.
Why?
Read on and see the breakdown of the respective companies, and who it affects.
Northern Rock
Northern Rock plc is a British bank, best known for becoming the first bank in 150 years to suffer a bank run after having had to approach the Bank of England for a loan facility, to replace money market funding, during the credit crisis in 2007. Having failed to find a commercial buyer for the business, it was taken into public ownership in 2008. Formerly the Northern Rock Building Society, the bank was formed in 1997 when the society floated on the London Stock Exchange. Since 1 January 2010 the Northern Rock name has referred to two companies – this bank, Northern Rock plc, and a separate asset company, Northern Rock (Asset Management) plc - which is where the debt was placed.
Who does it affect?
- Taxpayers
- Employees (2,500 of them, down from 5,500 in 2007)
- Northern Rock Bankers
Virgin Money
It launched as Virgin Direct Personal Financial Services Limited in partnership with Norwich Union during 1995 offering Personal Equity Plans and launched Virgin One, in a partnership with Royal Bank of Scotland, in 1997. In 2000, virginmoney.com was launched as a price comparison website. In 2001 RBS bought out Virgin's stake in the joint venture. In 2002, Virgin Direct merged with virginmoney.com to form the current company. In the 2000s Virgin Money expanded its operations around the world. In April 2004 the Virgin Group took 100% ownership of Virgin Money, buying the remaining 50% stake for £90 million.
In 2007, Branson put together plans to buy Northern Rock, and stated in 2009 that he would branch Virgin Money back into mortgages, by either acquisition or taking on a banking license. 2011 saw bids for Northern Rock, with Virgin Money becoming the buyer.
The Deal...
As part of the sale agreement, Virgin Money have made a number of commitments, including:
- No further compulsory redundancies other than those already announced by Northern Rock, for at least three years from completion; and to maintaining the number of branches currently operated by Northern Rock.
- Making Newcastle the operation headquarters for the combined business.
- Maintaining and extending support for the Northern Rock Foundation for a further year.
Related Links and Sources
- HM Treasury (Government report)
- BBC News
- Bloomberg (YouTube)
- Northern Rock (Wikipedia)
- Virgin Money (Wikipedia)
So readers, how do you feel about all of this?
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