Northern Rock - Shares [Merged Threads]

codger

ManAtHome wrote: »

What happens next? options look like:
1. Try flogging to a robbber-baron (shareholders wouldn't go for it)
2. government takeover (aka Railtrack) - possible shareholder court action
3. let it fold - banks have to stump up (deposit protection) and everyone thinks (if they don't already know) that nulab are planks.
4. let it drag on until all mortgages have departed (crap rates) then close it down - leaves taxpayers exposed to bad debts, drags on well after latest possible date for next election (see last bit of #3 above).

any others?

Applegarth is an appalling $*i!e.

The fantasist in me says how wonderful it would be to discover some legal means whereby his £700-a-day for life company pension payment can be seized by NR creditors.

The realist in me says not only will he continue to rack up more in a day than many another pensioner sees in a month, he'll pick up any number of boardroom positions elsewhere and be co-opted by Gordon Brown onto one or other of Labour's advisory committees.

As to the options now available: as so rigorous a defence has been put here and elsewhere of commercial reality and the way opportunistic profiteers like Applegarth can indeed get away with anything they like, there would at least be some consistency in sticking to the harsh facts of commercial reality where Northern Rock is concerned.

It was run with lethal disregard of consequence. Whatever damage its demise could do to the UK's banking system / reputation has already been done. It's dead so it should, like any other commercial failure, be buried.

Political reality is, however, different to commercial reality. And as there are more Labour MPs and vulnerable Labour seats in the North East than ever there were in the Midlands. . . here we go, Longbridge Mk II.


And then people ask why the electorate has no faith in the elected. . .

dippy

http://www.guardian.co.uk/business/2007/nov/23/northernrock.bankofenglandgovernor

"Revealed: massive hole in Northern Rock's assets

Investigation shows £53bn of mortgages owned by off shore company

Fresh doubts emerged last night about Northern Rock's ability to repay the £23bn of taxpayers' money it has been lent by the Bank of England.
A Guardian examination of Northern Rock's books has found that £53bn of mortgages - over 70% of its mortgage portfolio - is not owned by the beleaguered bank, but by a separate offshore company.
The same investigation reveals just how vulnerable the bank is to a cooling property market and demonstrates the scale of Northern Rock's exposure to mortgages where customers have borrowed heavily against their homes.
The mortgages are now owned by a Jersey-based trust company and have been used to underpin a series of bond issues to raise cash for Northern Rock. It means the pool of assets available to provide collateral for Northern Rock's creditors, including the Bank of England, is dramatically reduced, calling into question government claims that taxpayers' money is safe."

We've all heard how many times before that Northern Rock still has a "quality portfolio" of assets.

As they say, a fool and his money are easily parted. If a big fool jumps into a mug's game (and pledges "guarantee"s), will you follow suit?

maypole

Dippy

Just read about this in the Guardian. Just wondering whether to sell my shares now!

codger

House of Commons Treasury Select Committee,
Tuesday 16 October 2007

Q694:
Chairman:

You mentioned special-purpose vehicles. You have the Granite special purpose vehicle. What is the purpose of that?

Mr Applegarth:

Granite is our securitisation vehicle and accounts for roughly 50% of our funding.

The way securitisation works is you borrow against a pool of mortgages. The bond holders, the people who are lending the money against it, they carry the risk and therefore there can be no risk from those loans to the PLC's balance sheet, so even though it is shown in our balance sheet, it has to be a separate legal entity. The separate legal entity is a master trust.



Mmm.

So how rough an estimate was the revered Mr Applegarth's "roughly 50%" to the Select Committee a month ago?

[Deleted User]

This is the tip of the iceberg, everybanks been doing the offshore thing and most of the european, US and UK banks are now bankrupt.

The governments will print more money to bail the system out while everyone like us has to work harder for less due to inflation.

Recession coming

codger

dippy wrote: »

http://www.guardian.co.uk/business/2007/nov/23/northernrock.bankofenglandgovernor

"Revealed: massive hole in Northern Rock's assets

Investigation shows £53bn of mortgages owned by off shore company


We've all heard how many times before that Northern Rock still has a "quality portfolio" of assets.

As they say, a fool and his money are easily parted. If a big fool jumps into a mug's game (and pledges "guarantee"s), will you follow suit?

C'mon, Dippy. All is well.

Mr Darling -- because he is, after all, Chancellor of The Exchequer, and privy to information The Guardian is not -- is in no doubt of the position. As you may recall:

House of Commons Statement

Chancellor of Exchequer, 19th November, 2007


"I can tell the House that the Bank of England lending is secured against assets held by Northern Rock.

"These assets include high-quality mortgages with a significant protection margin built in and high-quality securities with the highest quality of credit rating.

"The Bank is the senior secured creditor.

"The FSA has said before, and continues to say, that Northern Rock’s main asset base—its mortgage book—is strong and sound.

"Like any lender on this scale, we have ensured that the Bank’s lending is subject to significant conditions and controls to ensure that our interests are protected.

"The Government has a clear duty to protect the public interest, and we will do that.

"We will protect the interests of the taxpayer."

He didn't say the Government would partially protect the public interest. The commitment is 100%.

And he didn't say the high-quality mortgage book is about the strongest and soundest you'll ever find in a filing cabinet in an office building opposite the fourth palm tree along the prom in St Helier.

The Chancellor is a financial genius to be relied upon.
Exactly like his predecessor.

codger

Yant1 wrote: »

This is the tip of the iceberg, everybanks been doing the offshore thing and most of the european, US and UK banks are now bankrupt.

The governments will print more money to bail the system out while everyone like us has to work harder for less due to inflation.

Recession coming

That's why I'm thinking identity theft may not be as bad as it's cracked up to be.

If I changed my name to, say, Dan The White, with a Jersey address, I ought to be pretty immune.

dippy

codger wrote: »

C'mon, Dippy. All is well.

Mr Darling -- because he is, after all, Chancellor of The Exchequer, and privy to information The Guardian is not -- is in no doubt of the position. As you may recall:

Of course, I trust him totally too. I'm surprised how the Bank of England could lend £11Billion the first time, secured against NR's assets. But the second £11Billion is an unsecured loan. Is there something going wrong there?

And all that doesn't compare with the loans that have been sold off to investors (50% of NR's loan book). These have been transferred to the separate Jersey company so that absolutely no one, not even the Bank of England, can lay their hands on it.

I'm totally convinced that the Chancellor is in control and isn't putting £22 billion of tax payers' money at risk. :eek:

baby_boomer

Sapphire wrote: »

If an individual is directly responsible for the downfall of a company, he should not be able to pocket hundreds of thousands (or millions). He should bear the brunt of the responsibility. There should be laws in place to prevent people from taking stupid (and obvious) risks. And how can people like Applegarth even stay in their positions after they have ruined a company?

Applegarth will have been working his socks off to get the company in the best possible shape for a sale, and he is best qualified to do this on behalf of the shareholders, employees and government.

No-one of any calibre would want the temporary position (and even if they were, they couldn't learn about the company in the time available anyway.)

Next you'll be saying next that McClaren doesn't deserve his contractual pay-off :eek:. Where will it end ? Do you think that England would be able to appoint a manager - or a company appoint a CEO - without exit terms? Both type of jobs tend to be shortish term IME.

I strongly disagree with your idea of laws being in place to prevent businessmen taking risks. We need to allow innovation, failure & success in order to make progress. In retrospect, both the FSA and NR shareholders needed to have asked more questions of the NR management. The accountability mechanisms were in place, they just weren't used by those with the power. The last thing we need is to give that power to bureaucrat minded, ignorant MPs.

OverlandLandy wrote: »

Shares are a gamble - Looks like I have LOST on NR BIG STYLE £25,00 value is now worth £1,860 at the close of play today.

I agree that it is not wise for someone who clearly doesn't understand shares to buy £25K in a single company.

Why on earth did you do that, or who on earth persuaded you to do that? Or do you have spread of shares across a £500K portfolio - which would make more sense and minimise your % loss?

OverlandLandy

maypole wrote: »

Dippy

Just read about this in the Guardian. Just wondering whether to sell my shares now!

I accidentally sold my shares today!
I clicked on the wrong button on my on-line dealing account and executed a sale rather than got a valuation!

Oh Well - It's cash - not much (compared to my losses) - but there is no point getting upset- it solves nothing. I have made good money on shares in the past - so I guess you cant win them all!

A phrase that one of my good customers used to say comes to mind:

"when you buy a lemon - you can still make Lemonade":think:

I always believe that things happen for a reason - So I didn't bother to buy them back. I will just need to work on getting my losses back...any tips