A&L next

tophamj

i have shares with A&l, should i sell or hold?

jonewer

Guy_Montag wrote: »

The thing is I don't give a toss if Rover go bust (£200m handout?), & nor do most people - employees & shareholders excepted. But if a bank goes broke, then what 1m+ people are in trouble - 1m+ voters.

I agree that NRK shouldn't be able to walk away thinking they got away with it - but they're not going to manage that. They are crippled as a company.

Er.. so just to get it right.. you dont give a toss about the manufacturing sector (which actually makes and sells stuff and earns money for UK Plc) but you do think that the entire banking sector (which recklessly borrows and lends money so we can get in loadsadebt) should be underwritten by the tax payer by virtue of the fact that er... more people are affected is a bank goes bust?

Of course Northern Rot wont just walk away from this, but it should be creditors and shareholders that stand sureity, not the taxpayer!

deary65

copied from hpc forum:

Does anyone know how the Financial Services Compensation Scheme actually works?

I had assumed it was some sort of pot of money - held by the Bank of England - to pay out if things went wrong.

Its seems from reading their website that it is, in fact, a levy on the rest of the financial sector - to which they have to contribute if a bank collapses. So, there is virtually no money in reserve, and it relies on the other banks having enough cash to pay out. Last year they paid out £149m (mostly on small stuff), and their reserves were £139m - small change compared to Northern Rock.

When you poke around on the FSCS website - you find they actually say that big events might occur, and would put a limit on how much they could pay out in total. There are various documents on their website - if correct, it seems they might have about £2bn to play with, and proposal to increase that to £4bn in 2008.

However, that £2bn or so, relies on other banks ponying up the funds - which in the current climate doesn't look likely!

Their press release says they can't interfere yet, and say that the FSA are saying Northern Rock is sound.

For large events, they pass the buck back to the chancellor and Bank of England under the so called "tri-partite arrangements"

It seems to me that the £31,700 is wishful thinking for something the size of Northern Rock.

Generali

Capitalism can't work without banks to move capital around in something approaching an efficient manner. That's why they get bailed out - they're necessary.

I guess if banks don't have any confidence in each other, why should depositors?

lynzpower

I understood that NR were paying poxy interest on deposits anyway.

A&L only pay decent rates to new customers, in any case.

Its not very MSE to have deposits in either of these two banks, theres scores of better more profitable options!

Guy_Montag

jonewer wrote: »

Er.. so just to get it right.. you dont give a toss about the manufacturing sector (which actually makes and sells stuff and earns money for UK Plc) but you do think that the entire banking sector (which recklessly borrows and lends money so we can get in loadsadebt) should be underwritten by the tax payer by virtue of the fact that er... more people are affected is a bank goes bust?

Of course Northern Rot wont just walk away from this, but it should be creditors and shareholders that stand sureity, not the taxpayer!

The problem was Rover were not selling things. I agree that Britain needs to make & sell things, but propping up a company like Rover isn't the answer. The British car industry can be viable, but apparently it needs to be run by the Japanese to be so.

My point is that most people don't care if any business goes bust unless they have a personal stake in it. However, the one type of business we (almosrt) all have a stake in is banks. HM Govt. are fully aware of this.

However, HM Govt. are not bailing out the shareholders, they are bailing out the depositors.

lynzpower

anyone know what the A&L shareholders dished out to themselves in the last financial year? :Just out of interest?

Generali

lynzpower wrote: »

anyone know what the A&L shareholders dished out to themselves in the last financial year? :Just out of interest?

A&L divindend per share was 54.1p/share from EPS of 96.4p.

http://www.alliance-leicester-group.co.uk/upload/pdf/FR2002071.pdf

Total profit attributable to ordinary shareholders was £432,000,000.

'Dished out' seems perjorative. Any problem with company owners taking a dividend from profits?

olly300

Of course Northern Rot wont just walk away from this, but it should be creditors and shareholders that stand sureity, not the taxpayer

I have to agree with guy_m that the government will not intervene with the shareholders and give them any money.

EU State Aid rules make it clear that the UK government is not allowed to prop up private companies as it's anti-competitive. http://www.dti.gov.uk/bbf/state-aid/rules/index.html

So giving the shareholders any cash is effectively propping up a company. The Railtrack shareholders didn't get any money even though it would be hard to argue that giving money to shareholders of a national railway system is anti-competitive. As a result of losing their money they tried to sue the government and lost. http://news.bbc.co.uk/1/hi/business/4340794.stm

The government can easily argue giving money to depositors is propping up the entire banking industry in the UK and Europe and not anti-competitive, like taking the railways back under government control.

olly300

'Dished out' seems perjorative. Any problem with company owners taking a dividend from profits?

Only if they have a business model like NR.