The Damp Northen Rock Fire Sale
RICHARD Branson’s Virgin Group and its backers and an in-house team were last night left as the only potential buyers for the mortgage bank (supported by YOUR money) Northern Rock as the government’s attempt to engineer a bidding war crashed and burned.
Did you read it anywhere else at all? Couldn’t have been right in little ol’ Anorak could it? It will be interesting to see what desperate spin Messrs Brown and Darling (the UK’s top politicians in case you’ve forgotten) come up with on this one today. Nationalisation of the bank is looking inevitable since a sale to either of the remaining bidders may be considered financial and political suicide.
Virgin and the board of Northern Rock both submitted proposals for the company’s future before yesterday’s deadline.
Olivant Partners, whose chairman is former Abbey and UBS chief Luqman Arnold and had submitted plans earlier in the process, announced it was pulling out of the race only eight minutes before stock markets closed.
A lightening quick swift sell-off in Northern Rock shares followed and they dropped to 88p.
Olivant’s Arnold blamed the government’s financing terms, which had been arranged by investment bank Goldman Sachs, for the end of its bid.
“Despite working intensively, we have been unable to formulate a value creation proposal which meets our investment criteria whilst also respecting the government’s proposed financing terms and the interests of other stakeholders in the company,” he said.
That was longhand for:
“It will never work”,
“It is a dead cat and it will not bounce sufficiently for us to wash our face, grab the loot and sod off”,
“No thanks, we’re outta here” … Things like that.
So, the superior banking consortium contender (in terms of actually knowing what they are talking about) is out of it.
When bankers are considering whether to give you a loan they use a mnemonic…SPARS.
S……Suitability (is the client a worthwhile risk?)
P……Purpose (what’s the money for? it should be none of their business)
A……Amount (what’s the least we give this toe rag?)
R……Repayment (what sort of interest can we screw out?)
S……Security (there must me no risk at all to the lender.Grab the home)
The ONLY contenders are a management team which (at best) was complicit in the disaster from which they are trying to rake even more of your money for themselves…and… a group headed by low cost expert Richard Branson. Branson has no banking licence, or experience, and in the past has been known to burst into tears when employees ask to be allowed to form a union. Apparently, the multi-millionaire regards union membership as some sort of betrayal of the House of Virgin. Some basic negotiating flaws there perhaps?
Do you think either team meet the SPARS rule?
Posted: 5th, February 2008 | In: Money Comment | TrackBack | Permalink
