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Virgin to buy Northern Rock

We've had a long summer of discontent in the financial markets, with the run on Northern Rock in the UK being one of the biggest banking scandals (the last bank run was over a century ago in Britain). So it is interesting to hear the breaking news story from the BBC today that Virgin may be about to buy Northern Rock.

This would be interesting as Virgin currently offer financial products through partnerships and, because they are not a fully-fledged bank but a distribution focused retail brand, they don't have a UK banking license. Hence, their partner is Royal Bank of Scotland. They also partner with Abbey for Equity Bonds, MBNA for credit cards, the Share Centre Ltd for share dealings and many others. I wonder what it will mean for these and other Virgin Money partnerships around the world.

The other interesting thing is that this move could turn them from a distributor/retailer to a fully integrated bank with a banking license. It could therefore mean that they move to a manufacturer and retailer model of business, a signficant change of strategy to Virgin's usual businesses. Normally, Virgin operate with manufacturing partners they can work with who gain from the leverage of the Virgin promise of fun, value, friendly products. Nevertheless, gaining the Northern Rock branch network and rebranding it as Virgin Money could make sense.

Mind you, so far Lloyds TSB, JC Flowers, Legal & General, RAB Capital, Cerebrus, the APAX Group and many other private equity firms have been rumoured to be buying Northern Rock, so I'm surprised we haven't had ideas of who else might be buying the bank.

Howsabout Tesco, Sainsbury and Asda (Wal*Mart); or BT, Vodafone and Orange; or even wrestler and actor Dwayne Douglas Johnson. Now that last one's my favourite as he's the guy we know as the Rock, so he would be CEO Rock of Northern Rock.

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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