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

le_loup

What is the matter with people.


Shareholding is risky. You took a risk. You lost.


Did the shareholders fight to stop their company offering 125% loan to value mortgages? Did the shareholders fight to stop their company "investing" in dodgy American debt? Did the shareholders offer to subscribe to a rights issue to bail out the company when investors were queuing to take their money out? Thought not.


..... and ironically, many of the shareholders got their shares for free because they saw benefits in the quick buck culture of privatising a mutual organisation which led directly to it's destruction.


So, no sympathy here.

FOREVER21

le_loup wrote: »

What is the matter with people.


Shareholding is risky. You took a risk. You lost.


Did the shareholders fight to stop their company offering 125% loan to value mortgages? Did the shareholders fight to stop their company "investing" in dodgy American debt? Did the shareholders offer to subscribe to a rights issue to bail out the company when investors were queuing to take their money out? Thought not.


..... and ironically, many of the shareholders got their shares for free because they saw benefits in the quick buck culture of privatising a mutual organisation which led directly to it's destruction.


So, no sympathy here.

Not looking for sympathy, but justice!

You tell me how many of those involved in the loss, often elderly people were to protest about the trading practices of NR. In any event even if they had, they would have been out voted by by the far larger votes of the business "shareholders."

By the way I do not hold any vested interest having never had NR shares but I can see how the former shareholders many who had been loyal customers for years feel agreived.

Also how the valuers could place a nil value on the set up puzzles me, I wonder if they ever visited NR headquarters in Newcastle and saw the building a veritable palace in a prime area?

PeacefulWaters

Didn't many of these shareholders pay not a penny for their shares?

Glen_Clark

pvt wrote: »

there were a number of potential "buyers" of the bank at that time offering as much as £2 per share, including, amongst others, Virgin. The government refused to allow any of them to buy it, and decided it would be "better value" for it to be taken into public ownership.
.

Yes of course there are people prepared to buy the assets and leave the liabilities to the taxpayer - nobody else would take those on.
Home repossessions are at a record high. Where would that have left Northern Rock with its 125% negative equity mortgages if the Government had not used taxpayers money to pump up house prices - HTB1, HTB2, FFL1, FFL2, Housing Benefit, QE etc etc etc combined with the strictest planning restrictions in the world?
You and the Hedfge Funds chose to risk your money on Northern Rock
The real 'little people' - the taxpayer had it forced on them without any choice.
'The Government' is not blameless but they have no money - only the taxpayer little people's money.

pvt

For all the cryticism, NR had a lower default rate than most other lenders. It's loan books were far healthier than most other banks' were.

The problem that beset it was that it borrowed some of its money from other banks rather than mostly from individual savers. So when many of the banks stopped lending other banks money, NR found itself unable to renew its borrowing. It therefore resorted to the BoE to ensure its liquidity. The BoE lent it money at punitive interest rates, and NR repaid the agreed interest on that borrowing.

The problem came some months later when the Government decided that, although the bank was servicing its debt, it would be "better value" to the taxpayer if they nationalised the bank and gave its owners ziltch.

It's like you buying a £10k car, and borrowing £3k to do it. You service the loan repayments but one day the loan company says it's "better value" for them if they repossess your car - but we'll independently value it and give you your share of its value. But the loan company tell the independent valuer that he has to consider it is broken, unroadworthy, and can't be driven (even though that's not true). So the valuer obviously says its not worth anything, and you get nothing. But the loan company keep on driving it, and a few years later they sell the asset they told the valuer was worthless to someone else for £7k. But you still get sweet FA.

pvt

PeacefulWaters wrote: »

Didn't many of these shareholders pay not a penny for their shares?

I definitely paid for mine - all of them.

Glen_Clark

pvt wrote: »

So when many of the banks stopped lending other banks money, .

..and why would they do that if Northern Rock was as healthy as you say?
The only people who would lend to Northern Rock, and guarantee their debts, were the little people (taxpayers) who had no choice, which gives the lender the right to lend on their own terms.

talexuser

I have an interest in losing out on my "free" shares through not selling soon enough, but I'm not bellyaching about losing the money. Applegarth turned out to be a shyster (confirmed by the Treasury Select Committee report), who then joined a private equity firm as "consultant" (which did not need vetting by the FSA as opposed to director), but left shortly afterwards... no wonder! Believing the NR shareholders are owed compensation by the taxpayer is just ludicrous, the company was run into the ground.

Thrugelmir

dengrainger wrote: »

the government is set to profit by over £10 Billion after loans, charges and interest at penal rates have been repaid.

Care to provide a source to this claim?

At it's peak for the year ended December 2006 NR made a pretax profit of £367 million. Given that the NR has contracted in size since then and still has to make money to repay the Treasury loan. A figure of £10 billion profit is total pie in the sky.

It could have been taken over by other banks,

Care to name a lender with £27 billion of free capital to keep NR solvent. Even Lloyds had to borrow £25 billion to keep HBOS afloat.

Glen_Clark

I think the only thing going for Northern Rock shareholders is shareholders in the Scottish Banks got bailed out, wheras those in the English ones did not. Why? I don't know, politics again, maybe they hired some 'self employed' Members of Parliament to fight their case?
But 2 wrongs don't make a right. None of them should have been bailed out by the taxpayer - That is not 'Free Market' or 'Capitalism' Its Socialism for the rich.