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Northern Rock’s rollercoaster with Virgin

Given that the Government is on the hook for £26 billion, or twice that depending on which calculation you use, some would think it would want keep the tension between Rock bidders going to the very last. After all, is this not about squeezing out as much money as possible for taxpayers and protecting depositors?

Yet time and time again, its moves have favoured Sir Richard Branson's consortium. The same appears to apply this time around. While publicly saying that both bids are still in contention, privately, it seems, Sir Richard has slipped into pole position. Moving the deadline for final bids forward clearly benefits the Virgin consortium, which has had much longer than its rival to work on an offer.

It is true that Sir Richard's group has agreed to put in more cash up front, which will provide a bigger cushion for the Government if things start to go wrong. But part of that injection comes from Virgin Money, which Sir Richard's consortium - and not another single person on this earth - believes is worth £250million.

Sir Richard will also get a fee for the use of his Virgin brand and a super-bonus, no doubt worth millions of pounds. After three years, he could more than double his initial £1 billion investment.

Northern Rock's own proposals include none of these filips and most of the returns will go directly to the bank's shareholders. No wonder RAB and SRM prefer it.

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But the Government seems to place more importance on public perception than the financial merits of either bid; Mr Brown seems to believe that Virgin, with Sir Richard at its helm, will save the day. Let us hope that he is right, for his sake.