Northern Rock Share Discussion Threads

[bryan2] 07/11/2008 10:11

12% HMG Lending and 3% BoE base rate!
The Government is charging those Banks who are taking up their offer of "help", 12% interest for the Preference Shares.
Yet the same Government is pressurising the Banks to lend at as close to 3% for mortgages and other loans.
Surely the Banks are not as stupid as that or are they?
None of the media reports seem to bring out this glaring contradiction.
Are the reporters so mathematically illiterate?

However there should be no reason for Northern Rock to charge at much more than 3% since they as a Government agency can borrow at this rate from the BoE.
What would the result of such a policy?

1. Repossessions at Northern Rock would virtually cease.
2. Mortgagees would move from other Banks to obtain this attractive rate.
3. This movement of mortgages to Northern Rock would help the other Banks in the short term as it would give them a much needed injection of liquidity.
Thus helping to resolve the present Banking crisis
4. In general, house repossessions would cease and the housing market stabilise.

Is this likely to happen?

[tullynessle] 06/11/2008 19:58

It appears that certain Banks have little interest in their Customer base, nor positive recognition to the Taxpayer (where applicable), for the enormous financial support provided recently.

Apparently some Banks that fail to on-pass the full benefit of recent Interest Rate reductions to their Customers consider that such behaviour is acceptable during this period of financial turmoil, caused primarily by the greed and incompetency of their industry.

Unfortunately the FSA and Politicians, including the Prime Minister and the Chancellor, cannot convince all the Banks of their responsibilities in this current crisis.

It appears that the Banks believe they are negotiating from a position of strength and any loyalty to their benefactors or customers is of little consequence.

(This may be a miscalculation as they rely heavily on their customer base as a source of retail funds.)

I have concerns that the Public, (and Corporate Employers), may demonstrate their disillusionment by withdrawing their funds from those tight-fisted banks who decide to increase their lending margins at this time.

Should this occur then the Government could assist by encouraging Northern Rock to accept any transfer funds and enhancing the role of that institution to provide full banking services.

[bryan2] 06/11/2008 16:30

Brown and Darling are insisting that Banks pass today's cut on to mortgagees.
I wonder if the they will follow their own advice and charge mortgagees of Northern Rock at a new rate of around 3%?
If not, why not

[bryan2] 04/11/2008 13:50

They said it again !!!!

Yesterdays Parliamentary Finance Committee gave the public a chance to question (through submitted e-mails) the FSA, Treasury and BoE heads.
Lord Turner (FSA) said Northern Rocks Mortgage Book was good quality.
He compared it favourably with Brad& Bings book which he said was inferior because of the quantity of Buy to Let and Self Cert mortgages.
Northern Rock had lent typically on 74% LtV and had fewer than average mortgage arrears(Oct 2007)
He even went on to justify the Together Mortgage(up to 125% LtV) in certain circumstances.
A young Doctor for instance with excellent employment prospects might well be a good risk for the Bank.
Mervyn King, Alistair Darling, and Lord Turner are now clear in their heads that the global credit crisis was a unique and unprecedented phenomena.
In the case of Northern Rock they agreed there was a crisis of liquidity and not of solvency
The Treasury and BoE now realise that they have a primary responsibility in providing a framework to get the British Banks through the crisis.
In fact their analysis was not far of the kind of points that DIYDAN and scribbler were pointing out back in Nov 2007.
How then can they deny us compensation for their dim witted and shortsighted action of confiscating the assets of Northern Rock?

[coogar] 03/11/2008 20:25

bryanmuppet

It has been known from the very beginning that it was liquidity which brought about about Northern Rock's downfall. What gives you the idea that this is something that only just came to light?

It came as no surprise to anyone except you and your muppet cronies.

Borrow money short-term (say 3 months) then lend it out long-term (say 25 years) - towards the end even at rates lower than you were able to borrow it at (no choice, see?) - to borrowers who may be unable to repay, either because they were borrowing up to 125% of the value of the asset at the time of the loan and/or didn't even have to prove their income.

Only a muppet would think that business plan stood any chance of success.

Duh!

[greycioud] 03/11/2008 10:40

It was so well run it was going to change its name to The Titannic Building Society! So well run the CEO's mistress had mortgage loans over £1m on earnings of circa £35K. Give it a rest Bryan. You are just showing yourself up for the numpty that you obviously are!!

[bryan2] 02/11/2008 18:04

Someone likened Northern Rock to the Budgie that the miners used to take underground to test for dangerous gases.
Only a complete fool or prat would blame the budgie for keeling over and ignore the signal it was giving.
A number of us warned that Northern Rock crisis was one of liquidity.
Only the BoE could resolve a liquidity crisis.
Unfortunatlly for Britain the BoE was led by Mervyn King
Its like if Chamberlain had taken Britain through WW2 instead of Churchill.
Leadership is important.
If Mervyns policy had remained unchanged perhaps only HSBC would remain in the Banking sector.

[diydan] 02/11/2008 11:02

Don't shoot the messenger....

One could argue that NRK had been better run than almost all other UK banks. Lets remember NRK were only the first UK bank to run into liquidity problems which came a year ago as a surprise to everyone. NRK needed short term BOE help that was given but at the cost of nationalisation of the bank despite the fact that the loans are well ahead of being repaid.

However all other UK banks seen this happen and have had a whole year to sort themselves out and be prepared for the situation, yet here we are going round the world cap in hand to the Arabs or Spanish or far eastern funds to bail out what is left of UK banking and thus the UK economy.

[coogar] 31/10/2008 16:55

I see we have yet another muppet with no idea about what's been happening in our midst.

[greycioud] 29/10/2008 17:16

Because it was a cowboy outfit run by muppets!!

[bryan2] 29/10/2008 16:58

Expert on Bloomberg said World had seen previous crisis of solvency and commodity mismatch, but never a liquidity crisis.
How could Northern Rock anticipate the extent of this crisis when the BoE did not?

[nrkd] 29/10/2008 13:21

Synopsis

Banking sector has fallen into the NRK liquidity pit, the UK sector receives Gov. guarantees and bail outs. NRK liquidity failure becomes a global issue, numerous banking organisations request central bank/IMF rescue. Andrew Caldwell of BDO Stoy Hayward appointed as valuer to recommend a shareholder compensation
figure for the Nationalisation of Northern Rock. No news from him yet. Several legal cases against the Gov's Nationalisation due to begin in January 09, with UK Shareholders, SRM Globaland RAB Capital appointing separate legal teams. NRK ahead on its scheduled repayment of BoE loan.

£1.50 per share by Christmas? it would save another £100m on legal expenses

[hvs] 24/10/2008 12:29

Lol!!!!!!

Its a cold Turkey this winter

[tullynessle] 24/10/2008 10:23

The Government should re-brand Northern Rock to "THE BRITISH BANK" and start pumping money directly to Corporate UK.

We should not be held to ransom by the Clearing Banks whilst they negotiate the terms for acceptance of taxpayers money required to ensure their survival.

[scribbler101] 23/10/2008 17:37

But the banks had to have the cash to meet capital adequacy rules.

Just increased by........

.................you guessed it!

[kpwuk] 23/10/2008 17:34

bryan2 - 23 Oct'08 - 09:45 - 1178 of 1178


BoE and Primary Maths.

HMG/BoE announced recently that it was going to "help" British Banks.
We will use this news item to do two projects.

Project 1
Calculate the profit/loss to a British Bank if it accepted the following help.
BoE lends Bank 10B£ for 5 years.
The BoE at the end of 5 years gets back its 10B£ but each year the bank must pay the BoE interest at rate of 12% of 10B£.
Further as a condition of the loan the bank must lend to small businesses and mortgage holders at an interest rate of less than 6%.

Project 2
Take out your English dictionary and look up the meaning of "help".

[greycioud] 23/10/2008 10:13

Nice to see bonuses paid for work well done!!

[miata] 23/10/2008 09:46

Workers at the failed bank Northern Rock will scoop bonuses worth up to £50million over the next three years.

Under Northern Rock's scheme, one of the biggest winners will be its new boss, Gary Hoffman, who is set to become Britain's best-paid public sector worker. Hoffman, 47, is already receiving a basic salary of £700,000. It has now emerged that he stands to pocket bonuses worth around £420,000 if the bank meets its schedule for repaying its loan from the Bank of England by 2010 and is returned to the private sector.

The majority of Northern Rock's 4,000 workers will receive four separate bonus payments - the first of which will be made next March when staff will get an extra 10 per cent on top of their basic salary. If it meets three separate deadlines, set for December 31 in 2008, 2009 and 2010, workers will get a bonus worth 10 per cent of their salary in the first two years.

In the final year, it rises to 15 per cent. The deadlines correlate to the bank's repayment of the £27billion loan. It must repay 25 per cent by the end of 2008, 75 per cent by 2009 and 100 per cent by 2010.

But the biggest bonus, equal to 25 per cent of their salary, will be paid if the bank leaves Government hands and is successfully returned to the private sector.

For a worker on the UK average wage of £23,750, this could mean they will get total bonus payments of more than £14,000 once all four handouts are given.

[bryan2] 23/10/2008 08:45

BoE and Primary Maths.

HMG/BoE announced recently that it was going to "help" British Banks.
We will use this news item to do two projects.

Project 1
Calculate the profit/loss to a British Bank if it accepted the following help.
BoE lends Bank 10B£ for 5 years.
The BoE at the end of 5 years gets back its 10B£ but each year the bank must pay the BoE interest at rate of 12% of 10B£.
Further as a condition of the loan the bank must lend to small businesses and mortgage holders at an interest rate of less than 6%.

Project 2
Take out your English dictionary and look up the meaning of "help".

[scribbler101] 22/10/2008 22:42

Grey - I think Dan is too old always to have been a muppet.

Whereas what others are has been there since before they emerged from it.

[greycioud] 22/10/2008 12:22

Dan

Have you always been a muppet or did it just happen?

[diydan] 21/10/2008 15:51

Wow all take a look at this.. Remember when the NR borrowing from BOE was all over the press and TV well they used to quote the BOE other assets to show how much NR had borrowed. Well here is the number for 15 oct 08

£161,858,826,762

We know NR owe about £11B of that so who has the rest.... thats £150B NR only got up to a max of £28B and they got nationalised and why not a mention of this on the TV or in press? Where is Peston when you need him or Simon Ward who used to post this number when his company were shorting NR? Not that he posted it for that reason he did it for the public interest.