Northern Rock Deal Shows Markets Healing: Ross
By: Jeff Cox | CNBC.com Senior Writer
The sale of Northern Rock bank to a group led by investors Wilbur Ross and Richard Branson is part of a market return to more rational behavior, Ross told CNBC.
Britain agreed to sell the nationalized lender to Virgin Money, which is the banking arm of Branson's Virgin empire, for a deal worth up to 1 billion pounds, or $1.6 billion.
The bank had come to be seen as a symbol of the financial crisis damage in Europe. But with its sale comes some hope that taxpayers will be off the hook from saving too-big-to-fail institutions threatened with failure after the subprime mortgage industry collapsed both in the U.S. and Europe.
Ross said the ongoing European sovereign debt crisis is "worrisome, but the market is starting to sort things out rationally."
The Northern Rock deal, he said, has been in the works for months and could have been done even before the British government took over the lender.
"This bank we've been looking at for months and months and months — in fact, all the way back before it was nationalized," Ross said. "We had made the government a proposal to buy it and they never would have needed to nationalize it."
Ross noted the political difficulties in getting debt problems straightened out for troubled nations such as Italy, Greece and others.
"The sad things is that because of the way decisions have to be made in the EU they are always a page or two behind the crisis," he said. "To get 17 legislatures to approve anything is really a hard problem. Little Slovakia came close to vetoing the whole (European Financial Stability fund), which would have been horrible if that had ever happened."
Virgin Money had faced competition to buy Northern Rock from NBNK, an investment vehicle set up to create a new retail bank by buying assets from bailed-out incumbents.
British deputy prime minister Nick Clegg said the Virgin Money deal was the best available
"It's kind of a stressful activity," Ross said of such deals. "It takes time and patience and is just hard to do. There are other people who also do it. It's just that once in a while we end up getting the thing we're looking for."
—Reuters contributed to this report.
