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

Thrugelmir

Glen_Clark wrote: »

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.

You are assuming that NR's mortgage and loan books will be wound up at a profit. The jury's out and will be for some years. Don't forget that the Treasury stepped in to assist in August 2007 and it took until March 2008 to get a handle on the full financial position. At this point it was nationalised. If you read the published Treasury report the reasoning is quite compelling. If the business was viable then the Treasury could have injected capital (aka RBS) rather than a loan.

atush

Glen_Clark wrote: »

..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.

They did that to call the money home to keep themselves afloat.

dengrainger

OPEN LETTER TO ED MILLIBAND MP


Rt Hon. Edward Miliband MP ​
Leader, ​
The Labour Party
Labour Central,
Kings Manor
Newcastle upon Tyne
NE1 6PA
XX April 2015


Dear Mr Miliband,

NORTHERN ROCK – A TRUST BETRAYED?

Northern Rock was nationalised in February 2008 and it’s shareholding expropriated by the last Labour Government, in which both Ed Balls and you were Cabinet Ministers. No-one, including the 150,000 small shareholders, most of who live in the north east, was offered any compensation for the expropriation of their shares by the very Labour Government many had voted for. They expected they would at least be treated fairly. Pensioners, savers, and hard working families who had invested in the Rock all suffered a great loss.

At the time of the nationalisation, those representing the small shareholders argued that nationalisation was unjust, and that Northern Rock plc was a solvent bank.

At was said by the shareholders at the time, it was clear that the Rock was suffering from a liquidity problem and was not insolvent. Comments made by Hector Sants, evidence to the Treasury Select Committee and from the recently released Minutes of the Bank of England all make it very clear that the evidence they had and considered was that Northern Rock was not suffering from the solvency issues that the Government exaggerated when it seized the company.

The ‘embedded value’ contained in its shareholders’ assets was considerable and, as anticipated, has now resulted in a substantial profit for the Government. This has been at the expense of the robbed shareholders. Northern Rock’s nationalised assets will yield the Government a multi-billion pound surplus over and above both the loan repayments and the penal rate of interest it has had to pay; yet at the same time the thousands of ‘little people’ have received nothing at all.

Many of us sense that this is a direct result of the betrayal of the ‘man in the street’ by the then Labour Cabinet, aided and abetted by an inadequate and failing tripartite system of regulation, which had been created by Labour a decade earlier.

When it was nationalised, the Rock had ‘unreal’ valuation assumptions imposed on the Valuer. This was only ever going to result in a Nil compensation figure. Surely it was not the intent of a Parliament controlled by a Labour Government to deliberately derive such a vast and unjust enrichment by expropriating ordinary people’s property for nil value?

Meanwhile other banks secretly benefited from huge sums of taxpayers’ monies without their shareholders losing all of their company. The North East’s Rock was treated differently. How do these sad true facts sit with your views about ‘living up to a moral responsibility’, ‘British Values’ and ‘Fairness’?

In the forthcoming election, Labour wants the trust of the people once again; but, how can we ‘salt of the earth’ savers and pensioners, across the country but particularly in the North East, ever trust Labour not to stitch us up again, and rob so many of us because you panicked?

Could such disregard for its traditional base in the North East be similar as to why Labour has lost so much support in Scotland?

On behalf of those who suffered when the Rock was nationalised without any compensation, we believe only a full public inquiry will get to the bottom of what really happened. The truth needs to be found as to what took place when its assets were seized and whether it is fair that none of the huge riches now being made will be returned to its rightful owners?

We hope and trust that you have an understanding and concern for what is right, and will now act accordingly. A public inquiry will offer the opportunity for fairness and justice and that is all we seek.

Will you, Mr Miliband, commit to that public inquiry?


Yours sincerely,

Dennis Grainger

Chairman
Northern Rock Small Shareholders Action Group

dengrainger

And the Labour Party response?
Rock Management's , and the global economy's fault; not ours......

Who would trust these people ever again.

I took 30 pensioners to London and met 5 Labour NE MP's in the House of Commons...
In the meeting I asked one of them, why he had voted to nationalise the Rock (and leave 150,000 pensioners robbed) and he said to us, no kidding, "I know nothing about Finance. We were just told to vote that way"

Suppose that speaks volumes.

Thrugelmir

dengrainger wrote: »

And the Labour Party response?
Rock Management's , and the global economy's fault; not ours......

Who would trust these people ever again.

Poly Peck, Enron, Maxwell Publishing. Investing in shares isn't risk free.

bowlhead99

dengrainger wrote: »

And the Labour Party response?
Rock Management's , and the global economy's fault; not ours......

Sounds fair enough.

said to us, no kidding, "I know nothing about Finance. We were just told to vote that way"

I would speculate that the 150,000 small shareholders you represent also know next to nothing about finance and are only following you because you told them it's their right to get restutution for their company going down the pan and needing an emergency imposition of stability to stop it entirely imploding.

It is good that companies get wiped out from time to time. It helps shareholders see the risks of holding shares in complex businesses such as banks, especially overleveraged ones funding low collateral mortgages in the middle of the largest credit crisis in the modern era.

Sure, if the government steady the ship with billions of funding and a steady hand, they might ultimately get their money back. Maybe. The 150000 little shareholders didn't have the requisite billions or indeed any credible resources or political clout to prop up the company themselves. Hence, they lost.

dengrainger

True, but not the issue here.
How many share investments result in HMG stealing a solvent company and ripping off the owners?
Not risk one normally takes into account.
Ask yourself why they did it in the way that they did,; ask yourself about the £millions of advice they paid for as to what the outcome would be.

dengrainger

It has already been made quite clear, including in the letter to Mr Miliband, that over £10 Billion of profit will accrue to HMG as result of this theft (whether it was taken in good faith or not), and that NONE of that windfall passes to the rightful owners...

Unjust enrichment, and restitution flowing from it, dies not need any blame to be involved or cited, so expensive Lincoln's Inn lawyers have advised us. How much of the windfall' to HMG (I was going to say taxpayer, but I suspect there is a difference) is rightly and fairly attributable to the Government (rather than the robbed shareholder owners) is the question.

It is all about fairness.

The fact that the 'little people' knew little or lots about Finance is totally irrelevant.
The fact that MPs representing them know nothing at all about Finance is, I respectfully suggest, totally relevant.

Daniel54

dengrainger wrote: »

True, but not the issue here.
How many share investments result in HMG stealing a solvent company and ripping off the owners?
Not risk one normally takes into account.
Ask yourself why they did it in the way that they did,; ask yourself about the £millions of advice they paid for as to what the outcome would be.

The ONS report of November 2009 set the total impact on government net debt at £102.3Bn.That does not suggest a solvent company at the time of nationalisation

"The impact from Northern Rock and related parties on public sector net debt as at end-December 2007, using information published in Northern Rock plc’s Annual Report and Accounts 2007, was £75.8 billion. Additionally, the effect of the Bank of England’s loan to Northern Rock plc, which was £26.9 billion at that time, also impacts on public sector net debt. The estimate of the total effect is therefore £102.3 billion, equivalent to 7.2 per cent of gross domestic product."

Maybe you envy me ,as an HBOS shareholder.After all,the shares I have now have only lost in the region of 96% of their pre crunch value.This is what happens when a poorly run company makes bad decisions and loses money for its owners -and without Government intervention my shares would be worth just as much as yours

dengrainger

Bank of England say Rock was solvent, how many times does it have to stated?
Something like £41 Billion possibly was the loan needed ( why wouldn't it be after a Bank Run - emanating from a leak from the Treasury - coupled with slow HMG response re depositor guarantees, took more than £18 billion out of Rock fractional reserve...but I believe the lending was only about £21 Billion at nationalisation (need to check that).

The net book value of the Rock at nationalisation was £1.6 Billion.

In October 2014 the Treasury announced that Northern Rock bondholders will receive compensation. The Treasury is also planning to sell a large part of the Northern Rock mortgage book to speed up the repayment of Government loans. The so called “good” part was sold to Virgin at a discount and realised a Billion pounds for HM Treasury.

Despite robust estimates that the “good” and “bad” parts of Northern Rock will yield a Surplus of over £ 12 Billion after loan and interest payments, the small shareholders have not been compensated.

This is the direct result of the betrayal by the previous Labour administration that imposed “unreal” valuation assumptions and ensured a “nil” valuation following gross incompetence by the Tripartite regime.

Surely it was not the intent of Parliament to derive “unjust enrichment” by confiscating assets at nil value that have a Net Present Value of approximately £ 10 Billion (Future Value being £ 12 Billion to £ 15 Billion).