Northern Rock Shares

ManAtHome

But if the mortgage book is that good, why haven't there been any serious offers to buy it, or even parts of it? Why are NR still offering 125% loans? Why are NR offering higher savings rates than most competitors? Why are NR offering staff and customer bonuses? Why aren't NR actually paying BoE penalty rates (the charges are conveniently being deferred)? and probably many more etcs?

I'd go with BLF on this one - nulab have basically stolen it so they can sooner/later palm it off for next to nothing (complete with ongoing subsidy, no shareholder vote) to somebody who may be inclined to "lend" them a few quid near election time. Any consequent losses can be funded by a few more stealth taxes presumably...

bristolleedsfan

ManAtHome wrote: »

But if the mortgage book is that good, why haven't there been any serious offers to buy it, or even parts of it? Why are NR still offering 125% loans? Why are NR offering higher savings rates than most competitors? Why are NR offering staff and customer bonuses? Why aren't NR actually paying BoE penalty rates (the charges are conveniently being deferred)? and probably many more etcs?

I'quote]


Because of the Governments insistence that it wanted the loans repaid in three years rather than five which whilst could be achieved by a mega sell off and downsizing made no commercial sense.

Are NR paying higher savings rates than others? Only last month A+L was offering 7%, Bradford and Bingley was offering 6.8% and in December Abbey was offering 7%. ( NR offered a 6.9% fix with access as reassurance to the depositors that they could access their funds without penalties what ever events might occur outside of the depositors control. ( A+L and B+B continue to offer over the odds savings rates)

There is nothing wrong with offering "some people" 120% morgages, what is wrong is to offer "anybody" a 120% morgage.

Its also true that their may lie further shocks within NR accounts ( this years accounts release have been delayed) that in itself is not the cause of the shares suddenly being delisted, they could however show NR and NR morgage book to be in a worse state than they are believed to be.

http://www.thisismoney.co.uk/news/article.html?in_article_id=429736&in_page_id=2

Its also true that NR Morgage book could be in a worse state in the future due to additional arrears and bad debts again that is not the reason for NR shares being suddenly delisted. ( so nothing has changed since the run on NR till now to justify a delisting 5 months on)

jamesd

Justifying a delisting is easy: now that the nationalisation has been announced the value of the shares is no longer set by the market but is now going to be set once only by the independent valuer. And in whatever subsequent court cases happen.

The shareholders before September took their risk, and lost, when the bank proved unable to handle the credit crunch. At that point, without help from the government, the shareholders would have lost almost all of the value of their shares when the bank went into liquidation after becoming insolvent. Today, at the point of nationalisation, there's very little left of the value except what the government is guaranteeing. The shareholders are entitled to that non-guaranteed value, however little it is.

it's entirely fair for the government to take most of the gains from Northern Rock in the future because the government is taking almost all of the risk, via its guarantee of effectively all of the lending to the bank to finance its outstanding and new mortgages. The shareholders can't take this risk even if they wanted to: without the government lending and guarantees there is no company left, the shareholders just aren't providing the funding necessary to run the business and free markets are unwilling to.

Those buying the shares since September were speculators. Nothing wrong with speculating but also no obligation for the government to help bail out speculators who place losing bets.

Shares are a risk-based investment and a FTSE 100 company goes bust or effectively bust about once every ten years. All investors should be aware of this, knowing that even investing in the largest companies is not a guarantee of the safety of all of their investments.

Those who didn't understand the risks they were taking have my sympathy.

It's also worth noting that the nationalisation bill is not specific to Northern Rock but is also expected to allow for the nationalisation of other banks in similar circumstances. If you aren't considering the possibility of this and are buying bank shares, you should consider this to be a clear warning that you're taking a risk and could lose some of your money via he shares of another bank.

bristolleedsfan

jamesd wrote: »

Justifying a delisting is easy: now that the nationalisation has been announced the value of the shares is no longer set by the market but is now going to be set once only by the independent valuer. And in whatever subsequent court cases happen.

The shareholders before September took their risk, and lost, when the bank proved unable to handle the credit crunch. At that point, without help from the government, the shareholders would have lost almost all of the value of their shares when the bank went into liquidation after becoming insolvent. Today, at the point of nationalisation, there's very little left of the value except what the government is guaranteeing. The shareholders are entitled to that non-guaranteed value, however little it is.

it's entirely fair for the government to take most of the gains from Northern Rock in the future because the government is taking almost all of the risk, via its guarantee of effectively all of the lending to the bank to finance its outstanding and new mortgages. The shareholders can't take this risk even if they wanted to: without the government lending and guarantees there is no company left, the shareholders just aren't providing the funding necessary to run the business and free markets are unwilling to.

Those buying the shares since September were speculators. Nothing wrong with speculating but also no obligation for the government to help bail out speculators who place losing bets.



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Sorry, whats been posed is that nothing has changed now to justifyNationalisation/Delisting of Shares than was the situation 5 Months ago.

Mr Darling talks about the Money Markets, they was the same or worse five months ago.

Suspicion is that the Government had hoped that the shares would have slumped to nothing or next to nothing by now, theve defied logic by remaining stubbingly high so the Government just decided to wipe out the shares.

I havent bought shares on last 5 months or 5 years so im merely looking at the bigger picture.

If NR was being Nationalised so that its assets could be sold off to pay off the taxpayer and then made defunct then that would be fine but for the Government to chuck out the current management and Shareholders, put in a new management team and for NR to continue to operate on a commercial basis and business as usual is totally unacceptable.

When people stick up for taxpayers funds, wont make any difference to Joe Public either way,( taxes wont go up or down) any money the Government recoups will merely get wasted elsewhere.

eddie_rex

Well i'm a shareholder and i expect the compensation will be very little.

However the suspension is tempory and when the shares are relisted will i still be shareholder?

bristolleedsfan

eddie_rex wrote: »

However the suspension is tempory and when the shares are relisted will i still be shareholder?

IMO, what the Government should be saying ( and should have said 5 months ago) is rather than NR shares be trading in a false marked the shares are temporarily being suspended, once the money markets are back to normal and tax payers money has been repaid the shares will be "un" suspended and will recommence at a level based in the value of NR at that time as assessed by an independent valuer.

As things stand at the moment, Shareholders are being kicked out, The Government will own NR 100% and in theory at a date in the future The Government could effectively privatise NR and offer shares for sale to the General Public.

Whilst my belief is that once the shares are relisted it will be then that Shareholders will receive final compensation ( and their will be very little of NR by then) the above paragraph is how things stand atm.


Suspicion is that Governments plan is kick out the Shareholders and then do a deal with Mr Branson, :eek: obviously Virgin can offer the Government a better deal with NR Shareholders having been kicked out.


http://www.metro.co.uk/money/article.html?in_article_id=99674&in_page_id=36&ito=newsnow

"Once the bank has been taken over, if people have got proposals, we will listen to them, but they have got to pass a simple test - what is the best value for the British taxpayer?" he said.

Innys

ad44downey wrote: »

Don't build your hopes up please, the shares are effectively worthless, you'll be lucky to get 20 pence per share from the government and that as far as the taxpayer is concerned is still 20 pence too much.

To my mind, 20 pence is too much. In fact, anything above zero is too much.

The plain fact is, if it wasn't for the tax payer, the bank would have gone bust months ago and the shares would have been worthless.

Yes, NR did and, currently does, have assets. But it also has huge liabilities. If that were not the case, why did it require taxpayer funding?

If one were to turn the clock back to when this debacle started and the taxpayer hadn't been forced to put their hand in their pocket, what would have happened? You can bet your bottom dollar NR wouldn't have been in business now and the shareholders would have got diddly squat.

So, four months on, why should shareholders be entitled to anything now?

If they were recompensed, that would be the green light to all speculators to invest in as many dodgy financial institutions as they could, safe in the knowledge that GB and his chums would bale them out if it went wrong.

jamesd

eddie rex, the nationalisation is temporary but you will no longer own your shares once it is complete. You will be paid whatever the arbitration panel says their value would have been without government loans. That is likely to be very little because the company could not have continued trading without the loans.

Airplanepics

I take it the government will contact every Share-Holder to confirm what is going on?

Halifax are (were) dealing my shares, how will it all go about? I'm so confused!!

bargains83

Innys wrote: »

To my mind, 20 pence is too much. In fact, anything above zero is too much.

The plain fact is, if it wasn't for the tax payer, the bank would have gone bust months ago and the shares would have been worthless.

Yes, NR did and, currently does, have assets. But it also has huge liabilities. If that were not the case, why did it require taxpayer funding?

If one were to turn the clock back to when this debacle started and the taxpayer hadn't been forced to put their hand in their pocket, what would have happened? You can bet your bottom dollar NR wouldn't have been in business now and the shareholders would have got diddly squat.

So, four months on, why should shareholders be entitled to anything now?

If they were recompensed, that would be the green light to all speculators to invest in as many dodgy financial institutions as they could, safe in the knowledge that GB and his chums would bale them out if it went wrong.

If the fact that Barclays borrowing money from the BoE had been publicised as much as Northern Rock doing it was then they would have gone belly up too. It was the publicity that made things much worse than what they should have been and it was the goverments fault that this happened. Without doubt this will be brought up when the shareholders go up in court.

Northern Rock's business plan was flawed but ultimately it was the run on the bank that caused the biggest problems IMO. The Bank of England could have lent them money on condition that they changed their business plan, if indeed it was flawed. When an individual goes to a bank for a loan they have to give over their life story (employment status, living arrangements etc). Nobody can say that the Bank of England weren't comfortable with NR's business plan or they wouldn't have lent them the money.

Northern Rock have a sound mortgage book apparently which the government has now stolen from shareholders along with the rest of the banks assests.

The government are the biggest party to blame in this mess, nobody else. They are giving this spin that they want to do the right thing for the 'tax-payer'. Whether they win or lose money, nothing will change visibily to the tax payer. The money they've used to lend to the bank was evidently never earmarked for public use or else why was it just available sitting there?, why was it not already pumped into the NHS or Education?.

Far too much money is pumped into useless politicians pockets for making equally useless decisions.