A couple of week's ago Richard Branson, through his Virgin Money business, finally bought Northern Rock for £747m. He was an original bidder for the bank in 2008 but had a lucky escape when the sale was pulled, allowing him to wait three years to pick up the same business cheaper.
The price he paid is half of the estimated £1.4bn of taxpayer cash that was pumped into the failing mortgage lender in 2008. Subsequently the government divided the business into 'good' and 'bad', with Virgin Money now purchasing the 'good'. The 'bad' - labelled UK Asset Resolution - holds tens of billions of pounds of securitised mortgages formerly on the books of Northern Rock and another failed mortgage lender, Bradford and Bingley. It's said it may well take a decade before the exact size of the losses on UK Asset Resolution's books can be quantified.
I don't intend to give an opinion on the sale of Northern Rock as I have no skills in finance other than handling my personal finances, but when I read this, my cynic's hat appeared perched on my head. Perhaps it's because the reputation of bankers is at an all time low, yet none has made the slightest attempt to make good the damage they have done to millions of innocent savers.
Another reason for cynicism is Sir Richard is promoting his new book "Screw Business as Usual" and an off-the-wall comment to journalists would ensure that extra publicity authors crave.
I wish him well should he decide not to focus on profit and also do good in the world. Microfinance may well work here in the UK, but his client group will be somewhat different to those in poorer countries. The system appears to have focused on women in these countries and many companies cnsider the risk of lending to men to be too high.
It will be interesting if Sir Richard does manage to change the face of banking, even in a small way. Only then would he acquire the title 'hero'.
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