Sir Richard Branson’s solution just might help Britain cope with the EU exit process. He has joined Britons in calling for another referendum, because he fears that the vote last week will cause a British recession. Sir Richard, head of the Virgin Group, blogged that “misrepresentation by the Leave campaign†means Parliament must vote another referendum. My husband and his sister, both UK nationals, signed the petition for a new vote on Brexit, which gathered more than 3 million verified signatures.
Billionaire Branson supported Bremain before the vote but now his position is being taken seriously even by the Brexit team headed by Boris Johnson. Boris now wants to negotiate new terms for British EU membership and hold another referendum before formally applying to exit, hoping to get a better deal on what is really upsetting Britons—EU immigration into the country—by changing the rules on free movement of people within the economic bloc. There are plenty of other countries whose people are also upset by the free movement rules.
Ironically enough the list including Poland, source of the alleged price-cutting plumbers upsetting the French, and other eastern European countries fearing the influx of Middle Eastern and African refugees into their countries, although Brexit voters main grouse with the EU was eastern Europeans arriving in their towns where they pushed down wages and added to demand for school and hospital places. This issue was the key factor in the Brexit victory, according to analysts of the poll results.
Banking
*Moody’s cut its outlook on the British banking system from stable to negative after the Brexit referendum. “We expect lower economic growth and heightened uncertainty over the U.K.’s future trade relationship with the EU to lead to reduced demand for credit, higher credit losses and more volatile wholesale funding conditions,” it wrote.
Oddly enough, the weirdo consumer banks which have sprung up lately are less vulnerable to economic chaos that the larger, High Street banks, yet Sir Richard Branson’s fledgling bank, Virgin Money,VM, has suffered more than most big banks in Brexit’s wake, because of panic. Like Donald Trump, Sir Richard Branson is a master of branding, but more modestly uses the name Virgin rather than his own. VM does not fund industry or mortgages, but is a retail operator, financing credit cards using small investor deposits and bond purchases. It sells pensions and insurance products for UK residents and also offers cards linked to frequent flier miles on Virgin Air (but not in the USA).
Insiders have been buying: Chairman Glen Moreno bought 46,164 shares at a price of 215 pence peron Tues. and non-executive Director Colin Keogh 20,000 shares at 2.004 on Mon. Analysts love the concept and rated it buy-strong buy in London, admittedly before the Brexit vote. The numbers are excellent up to the end of 2015, the last reported. Revenues rose to £522 mn from prior year £438 mn, on which pre-tax profits came to £138 mn or 22.9 pence/sh vs £34 mn or minus 4 pence per share in 2014. Now that it has profits, its pe ratio is 16.6x. All in sterling of course.
VM’s share price fell by a third, from £3.65 last Thursday to £2.15 yesterday. It called off a deal about which no details have been released. VM opened at £2.347. It has only a pink sheet GDR, an ADR issued for institutional investors, which, however, is “seasonedâ€, having been out for more than 90 days as it listed in late 2014. So US retail investors can buy it. The ticker symbol is VRGDF and you should pay $3.30 or less. Its rout reminds me of the Synchrony Financial selloff in the US where I own SYF, with the difference that VR did not issue more shares. I have an order in for the GDRs.
