Northern Rock sold to Virgin Money 'at a loss'

by Joanne Butcher, The Journal
POLITICAL and business leaders have given a broad welcome to Virgin Money’s purchase of Northern Rock.
But there is concern in some quarters about taxpayers facing a big loss and the decision not to return the Rock to its building society roots.
Newcastle City Council leader Nick Forbes said: “The decision by Virgin Money to make Newcastle their home sends a message of confidence in our city and the wider North East.
“Despite its restructuring in recent years, Northern Rock remains a critical part of the very fabric of the North East and a major employer of around 2,000 high quality professional staff.”

Newcastle Central MP Chi Onwurah, whose constituency is home to the Rock’s headquarters, said: “I welcome it, particularly on behalf of the people who work for Northern Rock who have had some four years of uncertainty and continual rounds of redundancies.”
But the Labour MP added: “The British taxpayer is selling at a loss of £400m and that is ‘good part’ of the bank and why wasn’t more done to look at the potential for a co-operative? One of the problems has been short-termism and the financial roulette. A co-operative would have helped address that in the market as a whole.”

Liberal Democrat peer John Shipley, leader of Newcastle City Council when the Rock hit trouble, said: “I think the Government has made the right decision. It is a pity that mutualism proved unworkable.
“The crucial thing has been jobs and the headquarters function.”
Newcastle North MP Catherine McKinnell said it was good news for jobs, but expressed disappointment ministers had not taken the opportunity for remutualisation to demonstrate that it was not “business as usual” for the banking sector.
Labour leader Ed Miliband said there would be “serious questions” asked about the deal and in particular about the losses to the taxpayer. He promised his party would scrutinise it, but stressed the need for greater competition.
Tory MP Mark Field, who represent the Cities of London and Westminster, criticised the sale saying the Rock was sold “for a song”.
“I’m very concerned about whether we are getting really good value for the taxpayer,” he said.
“There has to be a sense that Richard Branson has got the deal he was craving four years ago for a song today.”
TaxPayers’ Alliance director Matthew Sinclair said: “Taxpayers will be disappointed and angry that so much of the money put into Northern Rock has been lost, after too many politicians tried to pretend the bailout would be almost free or even turn a profit.”
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