Margareta Pagano: As Branson rocks the high street – bankers beware!

 

When I caught up with Sir Richard Branson on Thursday – the day Virgin Money scooped up Northern Rock – he had just stepped off a plane on the East Coast, having flown from Los Angeles where he had been partying at a Rock the Casbah charity gig.

In the 48 hours before that, the Virgin tycoon had been in San Francisco, London and Rotterdam; nothing new then. Even Branson sounded a little croaky, but thrilled that he had beaten rivals to Northern Rock after four years of on-off talks.

He tells me Rock can be profitable again, hopefully by the year after next, because of the Virgin brand effect. But he's not sure whether to switch names to Virgin Bank – because of bankers' appalling image – so he's going to tweet to ask his followers what they think. "People want to feel safe with their banks and I'm not sure they do any more," he says.

As well as safe, the public wants to feel that it's not being ripped off. So can Branson bring his magic to banking? And can he really shake up the high-street cartel? The signs are good. Overnight, Virgin becomes one of the UK's biggest players, with 5 per cent of the personal banking market. Rock brings another one million customers, giving Virgin four million accounts in all, 75 branches and 2,100 staff, a £14bn mortgage book, and retail deposits worth £16bn.

It's still tiny compared with the big four – Barclays, Lloyds, RBS and HSBC – which have some 80 per cent of the market, but, even so, the deal could still be a game-changer if Branson does all he promises. Expect more radical products like the Virgin One Account, lower margins, loyalty schemes, small-business lending at the micro-level and more deals – talks are ongoing with Bank of America's credit-card arm, and there'll be others.

This is promising stuff. From Branson's point of view, it's by far the cleverest move of his extraordinary career. If you take his past record – from airlines to gyms, Virgin Media and, more recently, space travel, then he has shaken up every market he has entered. Changing people's banking habits is a huge task, though – switching banks is something most people do just once in a lifetime. But Virgin Money has already snapped up a million customers and the public, certainly the young, like his swagger and the brand. He's got brains as well as guts with his top team of Sir David Clementi and the impressive Jayne-Ann Gadhia, who are determined to take on the giants.

Criticism that the taxpayer is left with a big loss on its Rock holding is understandable but misplaced. The Chancellor was right to sell because the sale brings money into the coffers now, and there'll be more to come, taking the full-price to £1bn. And as most banks are trading at 0.6 times book value, the 0.9 times which Virgin is paying for Rock looks pretty good. Talk of a float seems so early as to be academic in this market, while Branson's record with public companies is not great.

At Rock's Newcastle HQ on Thursday, staff cheered the news; and so should we. Here is a serious player capable of shaking up the high-street banks. It's a long time since the late Lord King of BA quipped that if the Bearded One had worn a suit not a jumper, he would have taken him more seriously. Bankers beware: he still doesn't wear suits, nor has he attended a board meeting in 30 years. Nice style.

What's in a word? Cameron succumbs to chancellor's charms

Don't you just adore Angela Merkel? The past few months have been galling for Germany's Chancellor as, one by one, Europe's so-called top politicians, the bankers and the media have flamed her over the eurozone crisis. They have tried to blame her – and her German partners – for not pushing the ECB to print more money. Quite rightly, she's resisted. Merkel may be frumpy, and often grumpy, but you have to admire the way she keeps her word, never kow-towing to gimmicks or grandstanding like so many of her fellow politicians. And, after all the tit-for-tats over EU treaty changes this week, it looks as though even David Cameron may have succumbed to her charms. In Berlin they agreed to work more closely with Europe to make growth and competitiveness a priority. This is a good start: working from the inside is always smarter.

There is no need for our young to be denied the opportunity to work

The tragedy of last week's figures showing more than a million of youngsters now out of work is that there are plenty of jobs around. As the CBI and the EEF, the manufacturers' organisation, constantly remind us, there are hundreds of companies with thousands of vacancies.

But the trade bodies claim that there are still not enough British workers sufficiently trained or qualified for the jobs. Many of those available are across the manufacturing and engineering sectors, which are still enjoying month-on-month growth. They range from the need for youngsters with basic NVQ- level skills to PhD-level abilities. There are also jobs in sales and marketing requiring some degree of skilled knowledge.

So why are there 2.6 million unemployed when there are jobs? It's partly because there is a time lag in demand from the manufacturing and engineering sectors, which has been steadily increasing over the past few years. It's partly because employers claim school-leavers and graduates are not up to scratch. And, finally, it's because not enough teenagers are being directed into the economy's growth areas.

What's so annoying is that there's so much that can be done to solve the problem. And it doesn't take rocket science or loads of money. We need to step up the ties between business and schools; have more campaigns such as the coalition's Inside Manufacturing campaign; more incentives for maths and physics teachers, and to cut degree courses from three years to two.

The elephant in the room is the need to make it easier for companies to employ people. This will allow them to be more flexible and restore their confidence to employ more. As Sir Richard Branson, to quote him again, says elsewhere in the newspaper, the coalition should switch incentives from benefits to employers so that they can afford to let more people go part time, flexitime or whatever.

But that requires confidence and boldness from our politicians. Are they up to the challenge?

Suggested Topics
PROMOTED VIDEO
News
video
Life and Style
tech
Arts and Entertainment
Southern charm: Nicolas Cage and Tye Sheridan in ‘Joe’
filmReview: Actor delivers astonishing performance in low budget drama
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
film
Arts and Entertainment
Up my street: The residents of the elegant Moray Place in Edinburgh's Georgian New Town
tvBBC's The Secret History of Our Streets reveals a fascinating window into Britain's past
Extras
indybest
News
Albus Dumbledore, the headmaster of Hogwarts School of Witchcraft and Wizardry has been the teaching profession's favourite teacher
education
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Luis Suarez looks towards the crowd during the 2-1 victory over England
sport
Life and Style
Cheesecake frozen yoghurt by Constance and Mathilde Lorenzi
food + drinkThink outside the cool box for this summer’s frozen treats
News
John Barrowman kisses his male “bride” at a mock Gretna Green during the Commonwealth Games opening ceremony
peopleBarrowman's opening ceremony message to Commonwealth countries where he would be sent to prison for being gay
Sport
Sir Bradley Wiggins removes his silver medal after the podium ceremony for the men’s 4,000m team pursuit in Glasgow yesterday
Commonwealth games Disappointment for Sir Bradley in team pursuit final as England are forced to settle for silver
Sport
Alistair Brownlee (right) celebrates with his gold medal after winning the men’s triathlon alongside brother Jonny (left), who got silver
England's Jodie Stimpson won the women’s triathlon in the morning
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Junior Research Analyst - Recruitment Resourcer

£18000 - £20000 per annum + OTE £25K: SThree: SThree Group has been well estab...

Senior Analyst - Financial Modelling

competitive: Progressive Recruitment: This really is a fantastic chance to joi...

Associate CXL Consultant

£40000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: CXL, Triple Po...

Business Anaylst

£60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: Business Anal...

Day In a Page

Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little
Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

Meet the US Army's shooting star

Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform