Is northern rock a better buy now that Richard Branson has expressed an interest in the company?

Question

Is Northern Rock a good buy

Answer 1

The issue is the Share Price.

The Company may be 'worth' £10+ a share, or if may be 'worth' £1 .. currently, the markets are paying just over £2 per share.

The problem is, NR needs to keep financing it's Mortgage book .. and borrowing £10 billion at 7% in order to finance Mortgage lending at rates of 5 to 6% is a guaranteed way to go bust.

If some-one with £10 billlion to lend at 4-5% comes along, then NR have a future ... if not, then sooner or later they are going to have to sell off the Mortgages at whatever they can get for them ... and that's when we find out what the Company is really worth ..

Answer 2

There was never any substantial problem with Northern Rock in the first place. People just panicked.
I asked my Charted Accountant husband who's a director of finance, a hyperthetical question at the time i.e. 'if you had money in Northern Rock at the moment would you withdraw it?' he said he wouldn't. Because the supposed problems that were happening were not unusual for Building Societies and everything was blown out of proportion. They were backed by the Bank of England and still people panicked. It was only when the Government stepped in that people took notice and stopped withdrawing their money.
In answer to your question then - no - people may perceive that Northen Rock is better if Richard Branson is involved because he has millions (if not billions), but it wasn't in any danger in the first place

Answer 3

Nope. it's going to be basically like Branson's installation of Virgin Trains. working expenditures would be subsidised to the song of quite a few billions out of the generic public handbag. check out the investment of the rail infrastructure and who will pay. that's not the rail operators. additionally think of regarding the potential wherein the government backed ninety 5% mortgages would be delivered to those wanting to get on the backside rung of the housing ladder. What are the percentages that the conduit for that little piece of organization would be a financial organization linked with Branson? the two the Tories and Branson are adept at shifting money from the generic public to the interior maximum sector so it feels like a deal made in capitalist heaven. i ask your self what tax breaks, if any, Branson gets out of his willingness to take Northern Rock off the government's palms?