Northern Rock - Shares [Merged Threads]

maypole

Ben500 "It's a magic door" you have to be a red dwarf fan to get that

[Deleted User]

alared wrote: »

Yeah these were the smart-a*ses that sold the day before when they were two quid hirer.

Next week there will be more pain and then the "bottom-fishers" will start to buy and the smart-a*ses will sell yet again at a profit.
Then on 1st Oct after a statement (profit warning)

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down they`ll go agian.

TAKEOVER BID

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my ar*se

Who in their right mind is going to buy a lame duck.

300p a share

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you read it here first!

Yep the poor kid is very inexperienced (1987 ) and doesnt know about selling shares short. You cant put one and one together and make 50 its just not logical , buying back from a short doesnt return the priced to the same value the market makers identify the supply and demand points through excellent mathematics. Good on those that predicted it and kicked !!!.

Those that are buying now are fools. Please read about investing and read my posts on it on the merged site. As ive said before its better to make a 30% profit when the chips are safe then to attempt a 40% profit when the chips are down and risk losing it all. If your going in now then you might as well be playing it on a statistically standard game of blackjack.

alared

1987,2000

For anyone that doesn`t know,the big institutions can actually sell shares they don`t even own,it`s called shorting.

Joe Public can`t do this unless they spread-bet.

jamesd

Northern Rock was paying people who were taking out money. Even staying open late to do it. Not a reason for savers to worry.

What is something to wonder about is how much higher the interest rate they are paying the Bank of England is than the mortgage interest rate they are charging to people taking out new mortgages, and how long Northern Rock can continue to subsidise those new mortgages from its own assets. Once it can no longer do that, it's rates must rise and it'll become uncompetitive for a while, having to pay its overheads but not able to sell any new mortgages. Maybe until it becomes insolvent, but more likely just until it is taken over, because the existing mortgage holders are paying money that's of value to a buyer.

If it becomes insolvent the shares become worthless. That's really unlikely, a takeover is more likely.

Existing mortgage holders who have a mortgage that is a discount off a Northen Rock bank base rate instead of a discount of the Bank of England base rate might suffer if NR raises its base rate or doesn't follow a BoE rate drop. I don't know if NR use their own base rate for mortgages or the BoE one. Those with fixed rate mortgages won't be affected by this even if it happens.

If this continues (money from BoE, not people taking money out of savings, that's expected) NR needs a buyer with a lot of money available to let it continue lending. Or a big bank to buy lots of its shares to give it a big cash infusion, as happened to the largest mortgage lender in the US: it sold part of itself to a bank to raise cash to continue trading.

alared

Whoever takes over will be buying debt.
If the very worse happens it could be sold off for a nominal fee (maybe a £1),asset stripped and then made profitable again by it`s new owners.

I feel the share price has to suffer a lot more.
Don`t forget the traders in the city don`t really give a monkey`s what happens to NR as long as they can make money one way or the other.

Still can`t get into the secure NR site.

dippy

Also, do not forget that northern rock has a "built-in poison pill" to penalise any hostile takeovers.

http://www.ft.com/cms/s/0/0de15c38-6192-11dc-bf25-0000779fd2ac.html

"Northern Rock's exposure to US mortgage-backed securities is minimal, but buying the whole company would still require a thick skin. The so-called poison pill - the conversion of the Northern Rock charitable foundation's dormant stake into a 15 per cent holding on takeover - would, as MF's Simon Maughan points out, just oblige the buyer to pay an additional 15 per cent over the current market capitalisation."

More worryingly, the first paragraph of that financial times story read:
"The gist of Mervyn King's message to Britain's banks yesterday was simple: 'You're on your own.'"

ashm1

The leaked Rightmove report showing falling asking prices can't of helped too much.

NR are an aggressive lender.

alared

One BILLION pounds withdrawn yesterday and they`re queuing up around the country today to take probably another billion.

JDinho

Bad move IMO!

The management has handled this situation very badly, they knew they would be arranging the facitlity with the BOE and made little attempts to reassure their customers beforehand. Nor did they put extra staff in branches and beef up their internet service to handle extra traffic.

Combine this with their dubious loan book, they are going to suffer losses their and will struggle to attract savers because their name is tainted.

I would expect the shares to fall further, to around 420p and then drift with market momentum. There will probably some bounces as people unwind derivative positions but in a volatile market I doubt it will recover.

jamesd

If I was betting, and I'm not, I'd be interested in knowing where the senior executives of NR are this weekend, particularly their senior legal people. If it's a hotel that happens to have senior executives of another bank staying there, Monday may just see a suspension of trading due to a takeover.

The poison pill is irrelevant when the share price is temporarily 30% below it's reasonable market value, provided any buyer has ample liquidity.

Also remember that the BoE money wasn't a gift, it was secured on the mortgage book of NR, so they do have the assets to back the money they took.