UK News
Insights from the UK and beyond
from DealZone:
Virgin acquires banking licence
Sir Richard Branson boosted his attempt to become a leading player in the UK banking sector by agreeing to buy Church House Trust, a small regional private lender. The deal effectively gives Virgin Money a banking licence, allowing it to offer a full range of products to consumers, since the proposed purchase has already been approved by the Financial Services Authority (FSA).
After making the acquisition, Virgin aims to grow its banking business organically. However, it has not ruled out buying further assets, such as those that RBS and Lloyds have said they will divest. Buying Northern Rock assets might be possible too. The offer document states: “Having established an initial banking platform, the Virgin Money Directors believe that the acquisition of Church House Trust will enable Virgin Money to contemplate future acquisitions as appropriate.
“The Government has said it hopes the disposal of bank assets will see new players enter the market and Virgin Money may consider opportunities should they present themselves.” At present Virgin has 2.5 million customers of its existing financial services arm, which offers credit card, savings, insurance and investment products. However, Church House Trust is allowed to offer mortgages and take deposits as well.
Virgin will put in £37.3 million of new capital into the Church House Trust business. In 2008 Virgin Money made a £27.5 million in pre-tax profit on £98.4 million turnover. Church House Trust reported a £450,000 pre-tax profit on £4.05 million operating income for the same period. Church House Trust shareholders will receive 509.2p in cash and 1.0294 contingent loan notes for each share they own. That values the business at £12.3 million.
from Commentaries:
Why is RBS’s boss selling its shares?
Controversy and running RBS go hand in hand. Stephen Hester replaced Fred Goodwin as chief executive of RBS and is now in hot water himself over his incentive pay deal. The chief executive of the state-controlled bank could be paid 9.6 million pounds over three years if the share price (currently 44p) reaches 70p. However, he seems to have so little faith in the shares reaching that level that he has offloaded 1,264,565 shares since last November at prices between 28.5p and 48p, yielding just over 464,000 pounds.
When unveiling first half results last week Hester asserted that "We have a strong plan in place that I believe can get us to where we need to be by 2013," which presumably includes recovery in a share price still languishing more than 90 percent off its peak.
from Commentaries:
Will Murray success at Wimbledon be RBS’s best return?
Royal Bank of Scotland is not best known for backing winners.
So the Scottish bank must be savouring Andy Murray's run at the Wimbledon tennis tournament.
World number three Murray is one of the "sports personalities of present and past" sponsored by RBS during the heady days of Sir Fred Goodwin.
Is RBS chief Stephen Hester worth £9.6m?
As chief executive for a company that is 70 percent owned by the government, a 9.6 million pounds pay package is quite a tidy sum.
It is a package that makes Royal Bank of Scotland chief executive Stephen Hester almost as well as paid as the Real Madrid-bound Cristiano Ronaldo.
Sir Fred Goodwin’s pension climbdown
Former Royal Bank of Scotland chief Sir Fred Goodwin has agreed to more than halve his widely criticised 703,000-pound pension award.
He will now only receive an annual payout of 342,000 pounds.
Chairman Philip Hampton said: “I am pleased that common sense has now prevailed and I hope that most reasonable people will welcome that.”
from The Great Debate UK:
Barclays’ conjuring trick
-- Margaret Doyle is a Reuters columnist. The opinions expressed are her own --
Abracadabra! Yet again, Barclays has pulled another rabbit out of its hat. With just days to go before the end-March deadline for the bank to apply for a government guarantee of its dodgier loans, it may again wriggle out of state control.
The Financial Services Authority (FSA) has concluded, after performing "stress tests" on its loan book, that the bank has enough capital. Barclays (BARC.L) has persuaded the authorities and investors (shares are trading at over three times their January low) -- of its soundness.
Could Goodwin learn from Profumo?
Treasury Minister Paul Myners was fulminating against Sir Fred Goodwin’s 700,000-pound pension in parliament this week when he made an intriguing suggestion.
“I still hope there’s the opportunity for Sir Fred to do the right thing and either return some of his pension or make a very substantial and long-term commitment to charity both of money and of his undoubted energy and resources,” he told a committee.
Nationalisation: an act of mercy for RBS?
Royal Bank of Scotland’s controversial former Chief Executive Fred Goodwin once memorably referred to the consolidation of smaller British lenders as “mercy killings.”
Goodwin was speaking in 2001, when he could still bask in the glory of RBS’ audacious acquisition of larger rival NatWest the previous year, a deal that set the standard by which all banking takeovers were judged.
What should be done about ex-RBS chief’s pension pot?
Former Royal Bank of Scotland Chief Executive Fred Goodwin is not having a good year.
Earlier this month he was hauled before parliament to explain his part in how RBS, the company he led for nine years, came close to the brink of collapse.
Should banks sponsor sports stars?
A bit like asking turkeys to vote for Christmas, parliamentarian John Mann has called on the likes of tennis player Andy Murray, equestrian star Zara Phillips and motor racing great Sir Jackie Stewart to scrap their sponsorship contracts with the Royal Bank of Scotland.
Bleeding red all over its accounts and shedding thousands of jobs, the struggling Scottish bank has been heavily criticised for doling out bonus payments to staff despite receiving billions of pounds of state aid.
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The Wall
