Back in October, government ministers revealed in a stock exchange announcement they planned to agree a temporary contract with Virgin Trains, extending its tenure by nine months whilst another competition is held for would-be franchisees. The announcement comes not long after a decision to award the contract to FirstGroup was repealed because of mysterious ‘technical flaws’ in the bidding process. Branson, no doubt, will be kite surfing for joy that his company is in with a fighting chance once again.
Elsewhere in Branson’s pantheon of business ventures, Virgin Money is considering another crack at buying up hundreds of branches that are being dumped by the Royal Bank of Scotland. The branches have come free because an EU condition about state aid caps is forcing the bank to offload 316 by the end of next year.
Furthermore, a deal to sell them to Santander has fallen through – the Spanish banking group wanted the branches but then reportedly freaked out when it realised how bad and antiquated the IT system is at RBS. But Branson will have to go head to head with the US private equity guru Christopher Flowers. If Flowers wins, perhaps we can look forward to the spectacle of another temper tantrum from our modern-day Willy Wonka. Of course, RBS may go back to the regulator saying it can’t sell the branches at a satisfactory price and secure a different form of penalty, so the game isn’t won yet for Old Beardie.
The West Coast deal has been the subject of some controversy: the government originally awarded it to FirstGroup, which would have seen Virgin’s 15 year tenure brought to an end. But Branson kicked up huge fuss, claiming the decision was outrageous and the bidding process flawed. One could be forgiven for assuming the Branson has friends in high places however, because as if by magic, the government suddenly retracted the deal with FirstGroup and launched some inquiries into how they had managed to win the bid in the first place. Three civil servants were suspended over how the process was conducted and the government is reimbursing all companies that bid for the cost of doing so.
Branson is already starting to make some progress in the banking sector, having bough the previously nationalised Northern Rock earlier in 2012. Getting his hands on these RBS branches would add 250,000 SMEs and around 1.8 million savers and borrowers to his books. Keep calm Branson, and things might go your way anyway…