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Has the UK government done a deal with Virgin Money?

As the ongoing reorganisation of Northern Rock continues and news filters through to the market that Virgin Money has applied for a banking licence through the FSA (Financial Services Authority) it would appear inevitable that Virgin Money will make an offer for part or all of the Northern Rock business. Indeed there are rumours in the city that this is already a "done deal" with the government left to tie up the loose ends before the deal can be announced.

It is an open secret that Richard Branson has been looking to become more involved in the UK banking sector and an acquisition of Northern Rock, probably at a rock bottom price, would obviously present a very interesting entry strategy. However, the UK government will need to play this one very carefully because a giveaway of Northern Rock will infuriate taxpayers and an inflated price would see the operation stay with the UK government for the foreseeable future.

It seems that a disposal of Northern Rock would be in the best interests of both the government and UK taxpayers in the medium to longer term but nothing is ever certain in the ongoing economic environment.

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