Keeping tabs on news from the UK whilst I am in Australia, I see that the headline on the BBC Business News is that Northern Rock faces ejection from the FTSE100, the index of the shares of the leading companies listed in London.  It is odd what is deemed to be newsworthy but it surprising that this Bank is still limping along at all as an independent entity.

Unfortunately, the Government, having found itself forced to preside over a fire sale following its mishandled bail out, looks to be fumbling the process of offloading Northern Rock.  All efforts to find an acceptable solution, where the bank will carry on roughly as before, look to foundering, squeezed between the demands of existing shareholders and the need for taxpayers to receive their money back at a commercial rate of return.  Hovering in the background are the European authorities, keen to ensure that no breach of their regulations takes place, who have imposed a deadline of February for the state aid to be withdrawn.

Notwithstanding the damage done to the UK’s financial services industry by having to go cap in hand to the Government for funding, the spectre of intervention from Brussels is almost as worrying.  The European Commission is struggling to prevent State intervention in industry across a number of countries, which have been rightly criticised by our finance sector, who look to benefit from increased genuine competition and it ill behoves us even to appear to indulge ourselves in similar practices.

Anyway, back to the plot.  Despite the expectation of a number of bids, once the first one, from a consortium lead by and labelled as Virgin, dropped through the letter box, it was immediately accepted as the preferred bidder.  To an outsider, this did seem a little strange.  You would not have thought that a wait of a few days more to see what the others would bring to the table would have been a problem.  Now the shareholders are kicking up a fuss and threatening to prevent any sale which they would perceive as robbing them of value.  I should have thought that the shares are virtually worthless as, in the event of foreclosure by the creditors, shareholders come some way after in the division of the spoils.  However, were I a shareholder, I might spot an opportunity in the Government’s increasing desperation and discomfiture.

Politicians are always somewhat in thrall to Virgin’s boss, Richard Branson, and I am sure that the prospect of this self-styled champion of the people bailing out Northern Rock has much to commend it to them.  There is also the likelihood that Virgin would retain more of the precious jobs in the North East than would some of the other bids.  The powers that be must be praying that this affair is resolved quickly and cleanly.  They most certainly do not want to spend years fighting court cases.