What's likely to have happened with our Northern Rock shares?

cosmicobserver

Bowl head


A postscript from me. I have offered to meet senior Tripartite people for 7 years to debate this injustice -- they do not dare to accept an open debate or TV interview. If you would like to meet and discuss this issue in detail I would be happy to do so.

Linton

cosmicobserver wrote: »

......
Bowlhead the very nature of retail banking is that you borrow "short term" and lend "long term". ALL banks do this. Their assets are primarily the loans made and the assets against which they have been secured or not. As you know Banks give overdrafts, short term loans but for mortgage banks most advances are in the form of mortgages that could mature between 5 and 30 years time. The NE business model was no different to other banks but simply structured more on competitive wholesale market rates that NR passed on to its customers. This allowed it to gain market share from lenders who were determined to keep a 3% plus margin between the cost of capital and lending rates........


You keep talking about the Shareholders did this or did not do that during the crisis! The shareholders were never consulted by the Management of NR , never allowed to vote on options for the future. Neither did the Government consult or offer a vote! There is no rationale for you to say that shareholders could not invest more via a Rights Issue -- this is utter rubbish because nobody even consulted them.

.......

So you are saying that NR took on extra risk and squeezed their margins to gain market share? And they got caught out. Some other banks didnt adopt those policies and didnt run out of cash.

Shareholders made the decision to hold NR shares either through ignorance or a desire to make a personal gain from NRs business policies. Either way they are responsible for their situation. Sure, if the government had bailed them out then they wouldnt have lost. What about my Marconi shares which became valueless in the tech crash? Why didnt the government bail out Marconi - its not fair!!

redux

bowlhead99 wrote: »

So when you say 'I maintain the leak came from within the government' you are not saying that from a position of knowledge, r that it is logical for the government to want to leak it, you are speculating ; you are saying it was 'the bad guys' rather than one of your own employees. Perhaps that is natural, for you to be on the defensive and make out that there was a conspiracy out there to destroy NR because the government operates from the South and does not like people from the North. I am unconvinced by that.

Same here: it's much more likely to be people in the firm.

Sometimes it isn't hard to get someone to give away something.

I phoned up a former employer I was in dispute with and ended up talking to the boss's secretary/PA.

At a certain stage I said well if Mr A won't do anything about it, maybe I could talk to the new owners.

"Who told you about that, it's supposed to be a secret?"

"Then it's a shame that the boss's secretary has just confirmed it."

"I haven't told you anything."

I had to explain how I'd figured it out for myself, mainly by overhearing 2 of them talking on a tour of our building, one said this office is the place where it's going to happen, and the other said he'd phone the bank in the morning.

I didn't tell her about the cringe that had passed across the face of a friend's fiance who happened to work for a credit reference agency, when I said where I worked, or the fact that the buyers were having big difficulties getting new supplies from firms who hadn't been paid, or indeed that the boss of an employment agency told me he'd had 5 people from the firm in tears in his office, 3 of them men, and he wouldn't send anyone there without a thorough explanation of what it was like.

I also refused to tell her that one of the people who was broadcasting certain false information outside the firm was the boss himself, as briefed by someone who had lied to him internally.

I never said anything outside the company that might damage its interests, even though I could have had a revenge motive, but other people did, including that managing director and a subsequent one.

Many years later, the head of personnel of a multinational which had by then taken it over said to me it sounded like I had a case for libel. When I reminded him of this in a subsequent phone call he furiously and falsely accused me of recording the previous call.

Glen_Clark

dengrainger wrote: »

Bowlhead.
Like Mr Peston I am unable (or unwilling) to reveal my sources.

A journalist protecting his sources is perfectly understandable.
But you are not a journalist protecting your sources are you?
You have alleged someone in the Government said something that started a run on your bank. I see no reason why you should protect their identity. Especially when you are trying to get compensation from the Government.

redux

Glen_Clark wrote: »

A journalist protecting his sources is perfectly understandable.
But you are not a journalist protecting your sources are you?
You have alleged someone in the Government said something that started a run on your bank. I see no reason why you should protect their identity. Especially when you are trying to get compensation from the Government.

Possibly for fear of liability if the accusation is false.

He also claimed to have evidence that a certain court was not willing to hear.

Courts do sometimes rule that certain types of evidence are inadmissable, which doesn't mean that the court is incompetent or corrupt, but much more likely that the evidence is not reliable, or perhaps isn't relevant.

cloud_dog

Glen_Clark wrote: »

A journalist protecting his sources is perfectly understandable.
But you are not a journalist protecting your sources are you?
You have alleged someone in the Government said something that started a run on your bank. I see no reason why you should protect their identity. Especially when you are trying to get compensation from the Government.

Just a question for those in the know ;);)

I understand that you have gone through a number of legal challenges including European Courts... When are you going to use this ace up your sleeve or have you already done so and it is either inadmissible, immaterial, or unproven?

Before you shout at me.... I raise the question purely and simply because from what 'you' (sic) have posted on here it appears to be the premise for the subsequent activity and therefore your complaint.

bowlhead99

dengrainger wrote: »

...was of course that, at that time, that was all they needed to sort themselves, and yes, as well look for a different business plan no longer relying on the money markets that had been their 70% source of funding for yonks without problems.

They hadn't been a source of funding without problems. They were a source of funding with the problem that they would be withdrawn during difficult economic circumstances. However, you and your board had not seen the problem because the problem was not evident during the boom times; this type of problem is instead revealed to you in the bear times.

It is like a little company being reliant on one customer. It could be 70% of their income "for years without problems". The problem of overreliance or concentration risk or whatever, is only revealed when it stops working. The companies that succeed in the long long term are those that recognise problems and risks even while they are coining it in during the good times.

But, Mr A was not asking for £61 Billion , in secret, and getting it - without the taxpayer knowing for over a year.......then again this was an English bank and he wasn't in Scotland.

So in your world of conspiracy theories you have been hard done by because you are in the north of England instead of in the wealthy south, and now you have been hard done by because you are in England not in Scotland.

As I suggested earlier, two wrongs don't make a right, so if someone else gets away with a bit more than you did and didn't lose their shirt, in slightly different circumstances, that doesn't automatically bestow upon you a right to keep yours. I would stop being jealous of those other banks if you value your mental health. At least they didn't make your bank step in to rescue HBOS like they did with Lloyds TSB.

Shareholders were not asked to help refinance the company.
As ever, the small shareholders had no power or influence whatsoever.

cosmicobserver wrote: »

You keep talking about the Shareholders did this or did not do that during the crisis! The shareholders were never consulted by the Management of NR , never allowed to vote on options for the future. Neither did the Government consult or offer a vote! There is no rationale for you to say that shareholders could not invest more via a Rights Issue -- this is utter rubbish because nobody even consulted them. The NR management "thought" up to £ 1 Billion could be realised from a Rights Issue and restructuring but the Government blocked this option.

When you are a shareholder you have the risk and rewards of ownership. It is your company. The directors are your agents; you as a population of shareholders had been appointing them and reappointing them and reviewing the numbers and voting at general meetings for over a decade since the company was public listed.

Therefore if I refer to "your company" or "You didn't have the finance to support your company without recourse to the taxpayer when the money market funding dried up" I am not speaking out of turn, because a company in a sense "is" its members on the share register at a point in time. Albeit with a veil of incorporation which means the legal personality which is NR can fail owing money to the money market lenders or the depositors or the employees or the government without you personally having to put any more money in than you did, if you don't want to.

But if both of you are saying small shareholders practically have no power and no rights and are just along for the ride, hoping to hang on for the rewards; this sounds like a risky position to be in. If you don't like the fact that being a direct minority owner of an individual bank during a financial crisis is a risky thing to be, don't be one. Millions of us aren't.

As you say, NR management had some sort of proposal whereby they thought they could raise maybe £500m from shareholders, which they later revised to £700m; I didn't hear £1bn. It was rejected by government as not really offering value for the taxpayer who effectively held you over a barrel because they knew you were dead without them; £500m or £1bn was not going to fill the hole.

I imagine the 150000 pensioners it's claimed are being represented were not all keen to double down their stakes. Maybe you personally would have been willing. The institutions like RAB special situations fund or their cohorts probably had some access to capital and a game plan to put more money in if it would regain a footing for an affordable price. The mainstream pension funds may or may not have been up for a placing or rights issue depending how they perceived the risk/reward prospects. But the money suggested by your Board was not significant enough to move the needle and cover the emergency funding requirement so the government said the plan wasn't good enough.

Huge share holdings were held by Pension Funds; so, in that way, the 'man in the street' lost out once again.

Through those "huge holdings" they have the ability to be listened to when they vote, which puts them in a stronger position than you the individual; another example why your position of being a private shareholder is weak and potentially high risk for the rewards on offer, even though it all seems nice while the share price rises from £4.50 to £12.

The pension funds hold a wide portfolio of assets so that if their NR shares turn out to be a bad investment, they have others, and the men on the street do not face ruin. I probably had some exposure to NR myself through such collective investments, but when that part of the portfolio failed I was OK. Or maybe my fund managers did their diligence and didn't like the NR model so didn't invest. The men on the street with such holdings who "lost out" a bit are probably not destitute because of it. Losses, as well as profits, are what risk capital is all about.

Dear Bowlhead

Appreciating that in the end we may agree to disagree

Agree!d

and that your toxic tautology is finely tuned against shareholders and banks

I quite like shareholders. I am one. I quite like banks. I have worked for one and I've been a customer of several, in various countries. I have held bank equities and prefs, and still do have some, along with a variety of other domestic and international equities and collective investment schemes. I am not anti shareholder, anti-bank, anti-capitalism, anti-regulation. A bit of all those things is fine.

You may not believe me but every thing I say can be verified -- you will not like the truth.

As I don't have an axe to grind and haven't last a wodge of cash on a bad investment in NR, I have the luxury of being dispassionate. It's not the case that I will dislike the truth. I am curious about the truth but to say I would not like the truth is silly. I am happy to hear your version of the truth, though may be cautious that coming from someone with a heavy vested interest, it may contain bias or lack true objectivity.

Firstly I should like to advise you that I am a Monetary Economics Graduate from the LSE, a Chartered Management Accountant, and I have attended senior management tuition at the Harvard Business School. Most people who know me or meet me consider that I am an expert in Finance and Economics. I retired as a Group Finance Director some years ago due to health concerns and now work part time for myself.

It's good to understand someone's background because the rantings of various anonymous strangers (with vested interests) on the internet may lack credibility of they are from people who misunderstand the nature of finance. So, thanks for informing us of your credentials.

However, in the better forums, perhaps like this one, you don't need credentials. It is not that whoever can swing the biggest !!!! is the one we all have to agree with. A discussion forum allows you to put forward a discussion point and have people consider its merits whether you got your education in Cambridge, UK or Cambridge, Mass or the school of life.

If it helps, I graduated with a finance degree too. I got the chartered accounting qualification rather than the management accounting one. I've been on a management course for high flyers. I've been a director of businesses in the financial sector. I haven't retired so my commercial experience is not past tense. Some of my friends think me a finance or economics expert. "Most people I meet might not because I don't ram it down their throats.

But hopefully it gets me a seat at the table to post about why I don't think the taxpayer should pay you off for your ownership stake in an ill-judged business model which your company, NR, employed until the money ran out.

I guess we're back to "agree to disagree".

Mistermeaner

Hmmmm 6hrs 40mins. Has bowl head 'won' or is a response Sat in draft form somewhere.....

Been a great thread.

dengrainger

Sadly, this isn't a question of who won or lost the debate.
Bowlhead did make some useful contributions, which I will review with our advisers and lawyers.

As for the rest of the 'gang' who jumped on his bandwagon, being generally negative or concentrating on minor issues or quibbling over semantics, my committee will waste no time examining the dross.

Mr Miliband has failed so far to respond, unsurprisingly.
His party let down the 'little people' and they will not be elected now.

Our valid concerns will be raised elsewhere, of course.

You can easily locate me.
Thanks, but no further contributions from me, whatever nastiness you carpers care to post from your anonymous 'brave' status.
It s you who do not recognise that your grandmothers, or people just like them have been let down.

I would have thought that on a site like this 'money saving expert' you would all be concerned for the little shareholder robbed by the powerful Government; nimby?

Good night, and thanks again to some for some useful contributions for us to consider.

Mistermeaner

Victory is confirmed