Many suspect the UK government sold the bank at a loss because it sees worse times ahead

THE QUEUES that formed outside branches of Northern Rock in 2007, the first run on a bank in 150 years in Britain, have become a stock image of the financial crisis that is still being played out today.

But the chapter concerning Northern Rock has, to a certain extent, come to an end, after the UK government sold the bank to Richard Branson’s Virgin Group.

The sale was said to have elicited cheers at the company’s head office in Newcastle, giving the remaining staff at least some certainty under a new owner. If they were happy with the deal, however, few others seemed to be.

The business was nationalised with £1.4 billion (€1.6 billion) of taxpayers’ money, after overstretching itself in the wholesale money markets. It was subsequently split into the “good” bank, which Branson is buying, and the “bad”, the problem mortgages, still on the UK treasury’s books.

The deal with Branson was worth £747 million, rising potentially to £1 billion, depending on the flotation or resale of the business over the next few years – a loss for the taxpayer of at least £400 million.

Labour and even some Conservative backbenchers attacked the timing of the sale – why sell now at a loss when the market could improve? The fear, and the widely held suspicion, is that the government decided to cash in now because it sees worse times ahead.

Labour and others were also disappointed that the government had ruled out re-mutualising Northern Rock. The business had operated successfully as a mutual for almost a century and a half but failed after just 10 years as a private enterprise.

The government welcomed the sale and said Virgin Money would shake up the banking market. Branson has had successes in doing so, certainly, but his record is mixed. With just 75 branches, the business also lacks the scale of its vastly bigger rivals.

The acquisition includes 2,100 staff, one million customers, a £14 billion mortgage book and savings deposits of £16 billion.

One can only hope that Virgin Money follows the example of Virgin Atlantic rather than Virgin Cola. Many a harried commuter was also quick to point to Virgin Trains, which almost destroyed Branson’s reputation. But despite the grumbles on the rail network, Branson is smiling, doubling passengers in the past six years and turning in record profits.

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QUEUES HAVE been forming on the high street again, albeit for a different reason, as gamers waited in line for the launch of Call of Duty: Modern Warfare 3, expected to be one of the biggest consumer products of the year.

It came too late, though, to fend off a dismal set of results from Game. The leading video games retailer on the high street warned it would fall into a loss this year of about £10 million.

Game was not alone – there has been a string of poor results from retailers over the past week, adding to the sense that Britain could be heading back into recession. Mothercare reported a loss of more than £80 million and is now reviewing how many of its 352 UK stores will stay open.

Majestic Wine warned of poor trading and, in fashion, French Connection posted a decline in third-quarter figures. Even Arcadia, which owns Top Shop, Burton, Dorothy Perkins and BHS, has suffered a drop in profits of roughly a third.

With a month to go before Christmas, there has been a record amount of discounting to lure shoppers, prompting one analyst to declare the “death” of full-price retailing.

But despite the gloom, a somewhat surprising company did give London’s West End a vote of confidence. Online auction site eBay said it would open a “pop-up” shop for five days at the beginning of December to coincide with the busiest period for online shopping.

The store will stock the site’s 200 bestselling items; instead of paying in cash at a till, shoppers scan a code on the price tag with their smart phones, which directs them to the eBay payment website. The goods are then delivered to the shoppers’ homes.

It all sounds somewhat counter-intuitive. While retailers including Tesco, Waterstone’s and HMV have rushed to build websites, going from clicks to bricks is rarer than hens’ teeth.

But eBay has already piloted a similar scheme in New York and House of Fraser has opened a shop in Aberdeen with no products, just assistants with iPads and coffee on tap.

Traditional retailers have eyed the internet warily – it is, after all, largely to blame for the long-term structural problems facing the high street. But could it now be providing a glimmer of hope?

David Teather writes for the Guardiannewspaper in London