Northern Rock

Paul Blomfield Excerpts

Monday 21st November 2011 Commons Chamber

[Mr Hoban]

What we put in place with Virgin Money is a capital instrument which is an important part of its financing structure, and the terms of that instrument will be set in place shortly. It is important to recognise that we want to see a well capitalised bank there. The FSA will look very carefully at the structure of Northern Rock and its ownership. As I said, Virgin operated a business model whereby it has capital levels which are much greater than those of some of its peers. That is a welcome sign that Virgin takes financial stability very seriously indeed.

[Paul Blomfield (Sheffield Central) (Lab)]

Is it any wonder that Members on the Labour Benches and people more widely question the value of the deal, when the principal purchaser says that he intends to sell out within a few years at double the money?

[Mr Hoban]

That is why we have agreed as part of the deal that if Northern Rock is sold within five years, we will get a benefit from that. It is not just those on the Government Benches who agree with the deal. It is the staff at Northern Rock, the Labour leader of Newcastle city council, the national officer of Unite and others who welcome the fact that this is a vote of confidence in the ability of Northern Rock to add value to the Virgin Money brand.