Sir Richard Branson has wanted to get into UK banking for years and now, finally, he’s succeeded by agreeing to buy bailed-out northern-based bank Northern Rock from the UK government for £747m.
It’s not clear yet if Rorthern Rock will become Virgin Bank or quite how much of the bank Virgin will own, given that Branson is a master at getting other investors to buy into Virgin brand properties.
He already owns Virgin Money of course but that’s a tiny player in the credit card market chiefly despite the supposed magic of the Virgin brand.
Northern Rock is a minnow in the UK banking market with just 70 branches although that didn’t stop it lending far too much back in 2008 when it had to be bailed out by the UK government when credit markets shut and it had far too little money of its own.
So it’s highly unlikely that the new regime will make much impact on the UK ‘big five’ of Barclays, HSBC, Lloyds, RBS and Santander. but coalition government chancellor George Osborne will able to boast that he’s got some money back for taxpayers and introduced a bit of new competition into the market. He’s also managed to produce a timely rabbit out of his top hat to deflect attention from the UK’s recent dire unemployment figures.
Virgin may have a lot of expensive new and groovy trains but its customer relations are dire as it hunts profits through the aggressive pricing of its monopoly service. The Guardian’s Simon Hoggart is a long-time foe of ‘Sir’ Richard Branson (as he calls him):
Good old Virgin. As we sped back from Liverpool we stopped at Stafford, where the train manager explained that he had dislocated his shoulder shifting luggage from the aisles. After half an hour they cancelled the service, and in the end, crammed into another train, we limped into London, very late. You might think it’s not actually the fault of “Sir” Richard Branson that the train manager was injured, but it is.
Nearly half the coaches on his Pendolino trains are first class so there is frequently no space in standard for either people or luggage. Which has to be hauled out of the way. Thanks, Branson. And where are those at-seat massages you promised, eh?
UK banks already attracted millions of complaints a year and, on current form, Branson and Northern Rock are likely to add to this impressive number.
If Branson really wants to be loved by UK consumers, which he does, then he’d better ensure that Northern Rock doesn’t make the same mistakes as Virgin Trains.