...of the Northern Rock debacle? It ssems that beardy Branson got it at a knock-down price...
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What was the total cost to the taxpayer?...
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Posted 6 months ago #
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Could be +£21bn..., according to the story
Posted 6 months ago # -
Nationalise the losses, privatise the profits.
Posted 6 months ago # -
Beardy Branston's purchase doesn't however include NR's mortgage arm - this became 'Northern Rock Asset Management', & remains nationalised.
I've a NRAM mortgage. For obvious reasons they're not offering new mortgage deals, so if I want a better deal the only way is to remortgage rather than get the benefit of a better deal with the bank I'm already with. Bit of a pain considering remortgaging costs would probably negate any saving on my monthly repayments, unless it's a large reduction on what I'm paying now.
Posted 6 months ago # -
Posted 6 months ago #
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My NRAM mortgage was up last year renegotiating was a faff as NR and NRAM can't talk to each other but not too much trouble. NR was still offering the best deal for me.
Nationalise the losses, privatise the profits.
quelle suprisePosted 6 months ago # -
What was the total cost to the taxpayer?...
Depends on what you mean by 'Taxpayer'. The total cost, whatever it might be, needs to be divided by all the government's revenue streams. 'Tax Payers' as in Income Tax Payers only account for (i think....) about 16% of that
Posted 6 months ago # -
maccruikeen I think most people would be happy with:
what the government paid for NR - what RB paid for his bit of it (have they recouped losses anywhere else?)Posted 6 months ago # -
The Government put in £1.4billion to rescue the bank, sold it for about £750M, so we've lost half the money.
The mortgage arm that was stripped out and kept nationalised was only kept separate because the loans it holds are at too high a risk of going bad, so were making the rest of Northern Rock unsaleable.
It makes my blood boil. People losing their jobs, businesses going under, benefits getting cut, but we can still find money to spunk literally donate to private companies.
Posted 6 months ago # -
The Government put in £1.4billion
is that a US billion (9 zeros) or the other kind of billion (12 zeros) ?
Posted 6 months ago # -
is that a US billion (9 zeros) or the other kind of billion (12 zeros) ?
You've lost me there I'm afraid. A billion is a billion, doesn't matter what country you're in. Nine zero's. Twelve zero's is trillions
Posted 6 months ago # -
Posted 6 months ago #
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You've lost me there I'm afraid. A billion is a billion, doesn't matter what country you're in. Nine zero's. Twelve zero's is trillions
Nope, it depends how old you are and from which country.
Posted 6 months ago # -
No-one uses long scale these days - well of relevance to us anyway.
The sale must have been at market value so that's as good as it gets.
Posted 6 months ago # -
so one kind of billion is a thousand times bigger than another kind of billion. So for clarity you'd need to find your £1.4 billion expressed as millions. Because millions are always millions
Posted 6 months ago # -
The sale must have been at market value so that's as good as it gets.
Only if you have to sell, ie a fire-sale
Posted 6 months ago # -
So for clarity you'd need to find your £1.4 billion expressed as millions. Because millions are always millions
Rubbish! Default here is short scale. I've been involved in finance for 25 years and never had this problem.
Posted 6 months ago # -
Sky news this morning suggested that the price paid for it was actually pretty high, and it was only the not-very-profitable section that had been sold, the side that was actually making a profit was still nationalised?
Posted 6 months ago # -
It makes my blood boil. People losing their jobs, businesses going under, benefits getting cut, but we can still find money to spunk literally donate to private companies.
The shareholders lost everything, they didn't get a penny. The people who were saved where the people who had deposits with NR i.e. individuals and businesses.
Posted 6 months ago # -
coffeeking - Member
Sky news this morning suggested that the price paid for it was actually pretty high, and it was only the not-very-profitable section that had been sold, the side that was actually making a profit was still nationalised?
skynews is the mouthpiece of the government
aemon holmes earlier today.....
Posted 6 months ago # -
The people who were saved where the people who had deposits with NR i.e. individuals and businesses.
Ron Sandler chief executive of Northern Rock didn't do too badly either.....he got to keep his job on £350,000 (fourteen times the average UK salary) and he doesn't pay any UK tax.
Posted 6 months ago # -
Northern Rock (the bit that Virgin Money just bought) is running at a loss.
Posted 6 months ago # -
Spoke to one of my tame industry chaps, and he's quite convinced they've been intentionally devalued and sold at the bottom of the market, so that George Osborne can say "Look how much money Labour wasted". But he's a declared cynic.
Doesn't really seem the idea time to sell though, bang in the middle of a new financial crisis.
Posted 6 months ago # -
Northern Rock (the bit that Virgin Money just bought) is running at a loss.
That Richard Branson sounds like a right mug.
Posted 6 months ago # -
Or maybe Osborne decided to sell now knowing that the markets are due for a massive slump...
Posted 6 months ago # -
Glancing at it now, it doesn't seem like a catastrophic piece of business. £750m+ (Branson says they'll probably end up paying more than this under the t&cs of the deal) for a chunk of NR not the whole thing bought up for 1.5bn by the gvt. The mortgage book, which is certainly not all high risk debt (I know this because they have my mortgage) is still in public ownership, and I imagine will be worth a fair bit of the difference.
The bit Virgin bought is still loss making, and even if you're generous and say the annual loss will be counted in a couple of tens of millions a year (top of my head it was £68m loss last year?), then this is another reason why disposal is a reasonable move for the gvt, especially as we need the cash.
Posted 6 months ago # -
Have to say my initial reaction was WTF, but if NR were operating at a loss then it probably is a good thing to do - cut your losses and get out. To make the business profitable I expect there'll have to be some 'efficiency drives', ie job losses. Politically that would be a very hard sell for the govt, they may have just dodged a bullet.
As for NRAM, it may still be profitable but the exposure to default must be huge. If (and it's only an if, don't want to start a debate) the housing market drops substantially, along with a continued recession and job losses, there must be a big default risk on many of those loans. Weren't NR one of the biggest providers of buy to let and 125% mortgages? These could be seen as the equivalent of the US sub prime.
If any of that comes about then we, the taxpayer, could be on the hook for even more losses.
Posted 6 months ago # -
Scenario A: There are lots of job losses in order to turn it around. This happens under Branson and not Osborne and the government is off the hook.
Scenario B: It need lots of investment to turn it around. Who, on here - on in the public at large, would have supported the government further investing in NR?
Posted 6 months ago # -
The Government put in £1.4billion to rescue the bank, sold it for about £750M, so we've lost half the money.
Yes, but the £1.4 billion was for the entire bank. This is just part of it that's been sold off, so the taxpayer still effectively owns NRAM
Posted 6 months ago # -
the taxpayer still effectively owns NRAM
The question is why? Probably because no one wants to buy it! The taxpayer are now underwriting these mortgages, it may turn out OK and we get our money back, or better turn a profit, or it may not and we end up losing more money.IMO governments (taxpayers) shouldn't be backstopping loss making companies, banks or otherwise. I've never seen the numbers but I'd imagine it would have been cheaper to let the FSCS guarantee kick in and cover lost savings, sell the mortgage book at market value, and let the bank fail.
I understand there may have been implications of the whole system going pop, but aren't we just delaying that (at huge expense) anyway?
Posted 6 months ago # -
To make the business profitable I expect there'll have to be some 'efficiency drives', ie job losses. Politically that would be a very hard sell for the govt, they may have just dodged a bullet.
Scenario A: There are lots of job losses in order to turn it around. This happens under Branson and not Osborne and the government is off the hook.
I think some people might be talking about a different company. There has been massive job losses since the government rescued Northern Rock - about 3,000. The last lot of job losses earlier this year was specifically to prepare Northern Rock for privatisation.
"The results also highlighted that cost management would remain a key area of focus in 2011, as the Company continues on its path to profitability and prepares for a return to the private sector. In line with this objective, the proposed restructure is intended to improve operational efficiency and to align the total number of employees with the medium term growth expectations of the Company.
It is anticipated that the proposed restructure will result in a reduction of up to 680 jobs, affecting employees at all grades across the Company. "
http://companyinfo.northernrock.co.uk/corporateCommunications/news/article.asp?newsID=396
Before that announcement there had already been a couple of thousand job losses.
Where do some people get the idea that job looses would be "very hard sell for the govt" ?
Why would the government be bothered ? Sackings/job losses don't cost governments votes - it's always sold as simply market-forces/value for money/modernisation/blah, blah, blah, and actually a rather good thing.
Posted 6 months ago # -
Virgin have pledged that there will be no compulsory job losses for at least 3 years
Posted 6 months ago # -
Just don't see how selling a Bank at such a loss is good for the tax payer
When the Government says Branson will make money out of it.Government = shite will never get the tax payers monies back
They won't even report what they have clawed back from the Banks
so far.Posted 6 months ago # -
Virgin have pledged that there will be no compulsory job losses for at least 3 years
Ah, so as per Ernie's post it's already been done for them.Where do some people get the idea that job looses would be "very hard sell for the govt" ? Why would the government be bothered ? Sackings/job losses don't cost governments votes - it's always sold as simply market-forces/value for money/modernisation/blah, blah, blah, and actually a rather good thing.
Is that sarcasm? I'm assuming it is and I'm just being slow, but on the off chance it isn't does the same apply to the miners? Or perhaps the nurses, firemen, and lollipop ladies that are shouted about every time someone suggests the public sector cutting back? And why do people hate Thatcher so much?Posted 6 months ago # -
maccruiskeen - Member
Depends on what you mean by 'Taxpayer'. The total cost, whatever it might be, needs to be divided by all the government's revenue streams. 'Tax Payers' as in Income Tax Payers only account for (i think....) about 16% of that
What about NI (non-employer bit), council tax, vehicle excise duty, VAT, tobacco/alcohol duties, etc..?
Posted 6 months ago #
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