City heavyweight Sandler has been lined up by Treasury to take over as executive chairman of the Rock. News of his appointment was all over the press this weekend, suggesting that nationalisation plans are well under way – and possibly that the Treasury is trying to butter us up for the inevitable.
Sandler is the man who managed to turn around the ailing Lloyd’s of London insurance market, so he’s used to salvaging British institutions that have fallen on hard times. He’s also a mate of Gordon Brown, so he’s unlikely to rock the boat too much.
If nationalisation does happen, it would apparently be positioned as a temporary measure, to give the Treasury more time to sort out the Rock and sell off its assets. But it would be an expensive liability to have on the public balance sheet. And it’s also probably illegal, so the government would have to cut some kind of deal with the EU.
The Rock is currently waiting on a report on financing options from the Treasury’s advisor Goldman Sachs, but it’s looking increasingly likely that Virgin and Olivant won’t be able to raise the necessary funds. Which probably leaves nationalisation as the ‘least worst option’, as Lib Dem Vince Cable likes to put it.
However, it would also leave the government with some serious egg on its face. It’s been desperate to sell the Rock to a private bidder, and if it fails to do so the Opposition – who are already on a big push to discredit Labour’s reputation for economic competence – will have a field day. Tory leader David Cameron has started already, saying nationalisation would represent ‘the most complete humiliation and failure for the Government’.
So when the Rock’s shareholders – led by agitators-in-chief RAB Capital and SRM Global – meet in Newcastle tomorrow, they’re facing an impossible choice. A vote to limit the board’s powers would be a blow to Virgin’s ambitions – but it would also make nationalisation more likely, and that could totally wipe out the value of their shares.
Still, since the Government has already poured more than £50bn of taxpayers' money into the money pit formerly known as the Rock – that’s nearly two grand each – taking the lender onto the public books might be our best chance of getting our money back...