This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/7041083.stm

The article has changed 11 times. There is an RSS feed of changes available.

Version 9 Version 10
Virgin pursues Northern Rock deal Virgin pursues Northern Rock deal
(about 1 hour later)
A consortium led by Sir Richard Branson's Virgin Group has put forward plans to take control of Northern Rock.A consortium led by Sir Richard Branson's Virgin Group has put forward plans to take control of Northern Rock.
Under the plans, Northern Rock would keep its stock market listing but would be rebranded as Virgin Money.Under the plans, Northern Rock would keep its stock market listing but would be rebranded as Virgin Money.
Sir Richard has put together a consortium of US and Asian investors, including insurance firm AIG, to take a majority stake in the troubled bank.Sir Richard has put together a consortium of US and Asian investors, including insurance firm AIG, to take a majority stake in the troubled bank.
Its plan would inject substantial funds into the bank and "guarantee" the jobs of most of its 6,000 staff, he added.Its plan would inject substantial funds into the bank and "guarantee" the jobs of most of its 6,000 staff, he added.
Northern Rock's shares, which have plummeted in value in the past six weeks, closed up 5.9% at 273.25p following Virgin's announcement.Northern Rock's shares, which have plummeted in value in the past six weeks, closed up 5.9% at 273.25p following Virgin's announcement.
Financial supportFinancial support
Virgin said its proposal was the "quickest possible solution" to restore public confidence in Northern Rock, which was severely undermined when it sought emergency funding from the Bank of England last month.Virgin said its proposal was the "quickest possible solution" to restore public confidence in Northern Rock, which was severely undermined when it sought emergency funding from the Bank of England last month.
Virgin said its consortium was not looking to buy Northern Rock but that it would inject "hundreds of millions of pounds" in return for a substantial stake.Virgin said its consortium was not looking to buy Northern Rock but that it would inject "hundreds of millions of pounds" in return for a substantial stake.
It is also looking to buy newly-issued shares at a discount to their current price.It is also looking to buy newly-issued shares at a discount to their current price.
I have pulled together a heavy-hitting consortium that we believe has not only the knowledge and expertise but the financial clout to make a once great British institution great again Sir Richard Branson Sir Richard Branson profileI have pulled together a heavy-hitting consortium that we believe has not only the knowledge and expertise but the financial clout to make a once great British institution great again Sir Richard Branson Sir Richard Branson profile
Virgin added that it would keep the Northern Rock business intact and retain its links with its charitable arm, the Northern Rock Foundation.Virgin added that it would keep the Northern Rock business intact and retain its links with its charitable arm, the Northern Rock Foundation.
Should the deal go ahead, the business would be run by Jayne-Anne Gadhia, head of Virgin's financial services business, who has been working with Sir Richard on developing a mortgage business for him.Should the deal go ahead, the business would be run by Jayne-Anne Gadhia, head of Virgin's financial services business, who has been working with Sir Richard on developing a mortgage business for him.
Virgin's proposed partners include US insurance giant AIG, buyout business WL Ross and Hong-Kong based investment firm First Eastern Investment.Virgin's proposed partners include US insurance giant AIG, buyout business WL Ross and Hong-Kong based investment firm First Eastern Investment.
Virgin said Northern Rock needed a "complete rebranding" and that it believed the business could prosper from an association with the Virgin brand. Virgin said Northern Rock needed a "complete rebranding" and that it believed the business could prosper from an association with the Virgin brand. He wouldn't say how much money Virgin was putting into the deal.
"I have pulled together a heavy-hitting consortium that we believe has not only the knowledge and expertise but the financial clout to make a once great British institution great again," Sir Richard said."I have pulled together a heavy-hitting consortium that we believe has not only the knowledge and expertise but the financial clout to make a once great British institution great again," Sir Richard said.
The Virgin tycoon said Northern Rock was a "fundamentally good business" but that its most senior executives had made mistakes and should be willing "to fall on their swords".The Virgin tycoon said Northern Rock was a "fundamentally good business" but that its most senior executives had made mistakes and should be willing "to fall on their swords".
CONSORTIUM MEMBERS Virgin Group: Its financial arm, Virgin Money, has nearly two million customersAIG Financial Products: Part of giant US insurer AIG which sponsors Manchester UnitedWL Ross: US venture capital firm seeking to rescue "financially distressed" businessesToscafund Asset Management: Hedge fund headed by former Royal Bank of Scotland boss Sir George MathewsonFirst Eastern Investment: Hong-Kong based fundCONSORTIUM MEMBERS Virgin Group: Its financial arm, Virgin Money, has nearly two million customersAIG Financial Products: Part of giant US insurer AIG which sponsors Manchester UnitedWL Ross: US venture capital firm seeking to rescue "financially distressed" businessesToscafund Asset Management: Hedge fund headed by former Royal Bank of Scotland boss Sir George MathewsonFirst Eastern Investment: Hong-Kong based fund
BBC business editor Robert Peston warned that any deal would be dependent on the government continuing to financially support Northern Rock.BBC business editor Robert Peston warned that any deal would be dependent on the government continuing to financially support Northern Rock.
"There are, of course, big obstacles, not least of which is that Northern Rock has now borrowed £13bn in emergency funds from the Bank of England - with the loans underwritten by the Treasury - and all of that would have to be refinanced by any successful bidder," he says."There are, of course, big obstacles, not least of which is that Northern Rock has now borrowed £13bn in emergency funds from the Bank of England - with the loans underwritten by the Treasury - and all of that would have to be refinanced by any successful bidder," he says.
Refinancing the loan in current market conditions would be "too difficult" for any buyer should Treasury support be withdrawn immediately on completion of the deal.Refinancing the loan in current market conditions would be "too difficult" for any buyer should Treasury support be withdrawn immediately on completion of the deal.
But Sir Richard insisted that the consortium's business plan would ensure that the public money would be recouped.But Sir Richard insisted that the consortium's business plan would ensure that the public money would be recouped.
Bid battle?Bid battle?
Virgin's move could also face competition from a number of possible rival suitors.Virgin's move could also face competition from a number of possible rival suitors.
Reports have suggested US private equity group JC Flowers has set aside £15bn ($30.6bn) to buy the bank.Reports have suggested US private equity group JC Flowers has set aside £15bn ($30.6bn) to buy the bank.
We appear to have strayed into 'you couldn't make it up' territory Robert Peston, BBC business editor Add your comments to Robert's blogWe appear to have strayed into 'you couldn't make it up' territory Robert Peston, BBC business editor Add your comments to Robert's blog
Further speculation also suggests that JC Flowers and rival Cerberus are planning to break up the firm and buy its lucrative home loan book.Further speculation also suggests that JC Flowers and rival Cerberus are planning to break up the firm and buy its lucrative home loan book.
Meanwhile, hedge funds SRM Global and RAB Capital have taken stakes in the firm, fanning hopes that the business may be taken over as a going concern.Meanwhile, hedge funds SRM Global and RAB Capital have taken stakes in the firm, fanning hopes that the business may be taken over as a going concern.
Northern Rock ran into trouble last month when it faced a liquidity crisis as a result of the global credit crunch - which began in the US.Northern Rock ran into trouble last month when it faced a liquidity crisis as a result of the global credit crunch - which began in the US.
Northern Rock was particularly hard-hit because it borrows an unusually large proportion of the money it lends to homebuyers from other banks.Northern Rock was particularly hard-hit because it borrows an unusually large proportion of the money it lends to homebuyers from other banks.
The Virgin group pushed into the financial services sector in 1995 and now offers credit cards, insurance, savings and pensions.The Virgin group pushed into the financial services sector in 1995 and now offers credit cards, insurance, savings and pensions.