Why Branson should be kept away from the Rock

Arnold's approach, through his Olivant consortium, foundered on Treasury determination to have a plan to repay the Bank of England within three years, and Thompson, new to the Northern Rock board, is no match for Branson when it comes to positive images.

Branson and Virgin talk a good game, but there are real dangers if they are allowed to play it over the Rock. Firstly, it's vastly bigger than Virgin Money, his existing business. This has been only modestly successful, and the £250 million value he places on it seemed high when he first launched his bid. Given the meltdown in bank shares since, the price looks like the stuff of fantasy today.

Secondly, the Branson business model takes a royalty off the top of ventures which use the Virgin name, from trains to cable TV. Used here, the sheer size of the Rock's business would ensure that he will rapidly get his cash investment back, whether the business is restored to health or not. Sir Brian Pitman, the chairman of the Branson consortium, insists that "the idea that this is a killing is a joke", and while he's among the most admired bankers in the City for creating Lloyds TSB, he really shouldn't be consorting with such company at his advanced age.

Thirdly, there's the question of what happens if sprinkling Branson magic dust on this bankrupt business fails to persuade the savers to stop worrying and deposit their money. While the Government guarantee is in place, this will be a problem only for the Rock's competitors (see above) but if it's gone in three years, as the Treasury wants, the deposits may start to flee to places that look safer.

Thompson, with his background in life assurance, is far more cautious about giving undertakings to meet such a target, which puts him at a competitive disadvantage. The Treasury is also spooked by the prospect of compulsory redundancies among Rock's 6500 staff, mostly in Labour's North-East stronghold-Jayne-Anne Ghadia, the boss of Virgin Money who would run Rock under the Branson plan, has publicly linked the three-year payback target with redundancies for the first time.

Each new twist in this miserable tale makes nationalisation more likely. If this business really is as valuable as its big shareholders believe, there's a simple solution. Pay holders a nominal 5p a share, along with a warrant entitling them to have their bank back once the Government has been repaid. It's administration by any other name, and it still looks like the least worst option.