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Context of 'November 26, 2007: Troubled British Bank Announces Preferred Bidder'

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A consortium led by Sir Richard Branson’s Virgin Group puts forward a proposal to rescue troubled British mortgage lender Northern Rock. Under the plans, Northern Rock would keep its stock market listing, but would be rebranded as Virgin Money. [Daily Telegraph, 2/26/2008; BBC, 8/5/2008]

Entity Tags: Northern Rock plc, Virgin Group Ltd, Richard Branson

Troubled British mortgage lender Northern Rock names a consortium headed by Sir Richard Branson’s Virgin Group as the preferred bidder to purchase it. The bank is up for sale because it has been hit hard by the credit crisis and requires new funding. The Virgin offer includes the immediate repayment of £11 billion ($22 billion) of the £25bn ($50 billion) Northern Rock has borrowed from the Bank of England to help it through the crisis. The remainder is to be paid over the next three years. RAB Capital, which is the second-largest shareholder in Northern Rock with a stake of about 6.7 percent, says it will oppose the move from Virgin. [Daily Telegraph, 2/26/2008; BBC, 8/5/2008]

Entity Tags: Northern Rock plc, RAB Capital plc, Virgin Group Ltd

Timeline Tags: Global Economic Crises

SRM Global, a hedge fund that controls 9.9 percent of shares in ailing British bank Northern Rock, warns Chancellor Alistair Darling not to consider nationalizing the bank for less than a fair price. In a letter sent shortly before Christmas, SRM says it has been advised that otherwise there would be a breach of the Human Rights Act and it would have a strong case to pursue ministers through the courts. [BBC, 8/5/2008]

Entity Tags: SRM Global, Her Majesty’s Treasury, Alistair Darling, Northern Rock plc

Timeline Tags: Global Economic Crises

At a meeting with management, the largest two shareholders in the troubled British mortgage lender Northern Rock—hedge funds RAB Capital and SRM Global—put forward a proposal that will stop the bank’s management negotiating its sale without consent from its shareholders. The bank needs to be sold to a new owner because of problems it has encountered during the credit crisis, and both major shareholders are worried they will not get much for their holdings (see November 26, 2007 and Shortly Before December 25, 2007). However, the bank’s management argues that the proposal should be rejected, as it would make a sale harder, and the other shareholders follow their lead, opening the way for the bank to be sold. [BBC, 8/5/2008]

Entity Tags: SRM Global, RAB Capital plc, Northern Rock plc

Timeline Tags: Global Economic Crises

The British Treasury says that it does not like either of two bids recently submitted for stricken lender Northern Rock (see February 4, 2008). The bank is being propped up by government loans and could be sold to a private buyer so that the government can get its money back. However, the Treasury is not satisfied with the bids and sees nationalization as a better outcome for the taxpayer. One of the consortia, led by Sir Richard Branson’s Virgin Group, is told that it is the front-runner to take control of the bank. The Treasury urges both Virgin and its rival bidder to offer more. [BBC, 8/5/2008]

Entity Tags: Virgin Group Ltd, Her Majesty’s Treasury, Northern Rock plc

Timeline Tags: Global Economic Crises

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