Northern Rock Shares

Aegis

bargains83 wrote: »

SRM have sought legal advice regarding this, and I hope they are successful.

I hope the opposite. Doing this would set a very dangerous precedent for future business dealings involving high-risk banks. Not to mention the fact that it's unfair for the taxpayer to have to pay so much over market value for a business that would have failed if it weren't for guarantees that also would have been footed by the taxpayer had things really gone terribly wrong.

As others have said, this stock fell for a long time, and those who saw large drops had ample time to sell on the way down, while those who bought after the initial falls have no-one to blame but themselves for speculating against a lot of advice from all over the place and getting unlucky.

cloud_dog

Sorry Bargain, but I think we'll have to agree to disagree.

bargains83 wrote: »

Why would anyone buy it?, all it has now is a tarnished name. The name is tarnished thanks to the media and the government. Nobody else is to blame, certainly not the shareholders or the directors.

Who made the risky decisions and put the bank in that position - board of directors?

Had there not been the run on the bank the problem wouldnt have been anything like what its become.

And the run on the bank was caused by holding worthless investments? Had Leeds United FC managed to finish in the top four of the Premiership and qualify for europe every year then their business model would have been fine also and not ended up with bancruptcy.

Shareholders have had no say in anything with regards to the loans from the BoE, they weren't even given any options with regards to the sale of the bank. In addition they haven't even asked the tax payer if they wanted to invest/own a falling bank but gone ahead and done it anyway.

The government have glorifiedly stolen the bank from the shareholders and money from the tax-payer!.

But if the BoE (whoever) hadn't bank-rolled NR would the bank still be trading, or would it have gone in to meltdown and be worthless?

The mortgage book and other assests it has are valuable, though not at the moment because credit isn't available easily and nobody will want to buy it right now because there is complete uncertainty about the way things are going in the financial markets and confidence is extremely low.

Isn't this the crux of the matter. NR have paper which is virtually impossible to value (because now there isn't a market) and credit to re-finance is virtually non-existent.

bargains83

cloud_dog wrote: »

Sorry Bargain, but I think we'll have to agree to disagree.

Who made the risky decisions and put the bank in that position - board of directors?

The BOE also lent the money out knowing full well what Northern Rock's business model was. Northern Rock managed to repay £10 billion off the BOE loans towards the end of last year, so they did pay some of the loans back by selling off some of its assets. The credit crunch wasn't forseen and nobody knows when things are going to stabalise. It is impossible to say what would have happened if Northern Rock had not taken loans from the BOE. They would have had to downsize likely and its mortgages wouldn't have been as attractive to consumers but borrowing from the BOE is evidently common practice as Barclays did the same on a smaller scale.

cloud_dog wrote: »

And the run on the bank was caused by holding worthless investments? Had Leeds United FC managed to finish in the top four of the Premiership and qualify for europe every year then their business model would have been fine also and not ended up with bancruptcy.
The run on the bank was caused by the media leading people to believe that the bank was insolvent and was going to go bust at a time when it was nowhere near such a thing. The FSA has always guaranteed deposits up to a certain value in any UK bank, the media failed to remind people of this and people panicked and went to withdraw all their savings and investments with the bank, at a time when liquidity in the market was difficult to obtain this was the worst thing that could have happened and a disaster.

Comparing a football club to a bank is a poor comparison, football does not make the world go round despite what many people think. I don't think any football club could ever have a 'sound' business plan as there are always risks of players being bought, TV deals falling through, etc. These are all variables that are significantly different to a global credit crunch which will infact be affecting every business both directly and indirectly including football.

cloud_dog wrote: »

But if the BoE (whoever) hadn't bank-rolled NR would the bank still be trading, or would it have gone in to meltdown and be worthless?

This is impossible to answer, nobody knows what would have happened with regards to Northern Rock everybody is saying would have, could have, should have. My personal opinion is that when the BOE lent Northern Rock money they should have assessed their business plan and I'm sure they did, They wouldn't hand out Billions willy nilly. Or maybe they did?, in which case they are just as accountable for the mess the bank is in as the directors are.

cloud_dog wrote: »

Isn't this the crux of the matter. NR have paper which is virtually impossible to value (because now there isn't a market) and credit to re-finance is virtually non-existent.

Which is why they should have acted back in september rather than dithered and messed around, its impossible to predict what happens in the financial markets but taking 6 months to only just decide to downsize the bank and reorganise it is rediculous. If it was such a big deal as it was made out when Northern Rock first went to the Bank of England, this decision should have been taken then which again begs the question why was so much money lent to Northern Rock if it was believed that its business plan wasn't sustainable?.

cloud_dog

bargains83 wrote: »

Comparing a football club to a bank is a poor comparison, football does not make the world go round despite what many people think. I don't think any football club could ever have a 'sound' business plan as there are always risks of players being bought, TV deals falling through, etc.

you're missing the point, both had bad and unsustainable business models. Obviosuly the impact of NR is far more significant.

This is impossible to answer, nobody knows what would have happened with regards to Northern Rock everybody is saying would have, could have, should have. My personal opinion is that when the BOE lent Northern Rock money they should have assessed their business plan and I'm sure they did, They wouldn't hand out Billions willy nilly. Or maybe they did?, in which case they are just as accountable for the mess the bank is in as the directors are.

Which is why they should have acted back in september rather than dithered and messed around, its impossible to predict what happens in the financial markets but taking 6 months to only just decide to downsize the bank and reorganise it is rediculous. If it was such a big deal as it was made out when Northern Rock first went to the Bank of England, this decision should have been taken then which again begs the question why was so much money lent to Northern Rock if it was believed that its business plan wasn't sustainable?.

Perhaps the BoE were looking at the bigger picture and not just NR. As a wise and great poster pointed out (endlessly) the BoE are there as a lender of last resort and are there to safeguard orderly banking facilities. This doesn't cover shareholders who, are on their own.

Hindsight is a wonderful thing but we'll just agree to disagree.

bristolleedsfan

cloud_dog wrote: »

This doesn't cover shareholders who, are on their own.

quote]


Not quite on their own.

http://business.timesonline.co.uk/tol/business/law/article3399728.ece

cloud_dog

bristolleedsfan wrote: »

cloud_dog wrote: »

This doesn't cover shareholders who, are on their own.

quote]


Not quite on their own.

http://business.timesonline.co.uk/tol/business/law/article3399728.ece

Yes, shareholders will fight for what they can but they are in a different class compared to people who actually have savings or mortgages, etc with NR. It is these people who the institutions must protect, shareholders accept the risk involved with their investment decision.

bristolleedsfan

cloud_dog wrote: »

bristolleedsfan wrote: »

Yes, shareholders will fight for what they can but they are in a different class compared to people who actually have savings or mortgages, etc with NR. It is these people who the institutions must protect, shareholders accept the risk involved with their investment decision.

As a minimum i hope Legal Action costs the Government a fortune and a lot of dirt is dug up on the way NR situation was handled by them.

http://www.independent.co.uk/news/business/news/legislation-aims-to-head-off-legal-action-by-northern-rock-investors-784460.html

Interesting how everyone wants their pound of flesh. :rolleyes:

http://www.moneyam.com/action/news/showArticle?id=2691599

cloud_dog

Sorry BLF, but you come across as a very bitter person.

Politics is a game and I've never known a newspaper to actually report the facts there's always a slant one way or the other. Irrespective of the colour of the government in situations like this they are damnend if they do and damned if they don't.

bristolleedsfan

cloud_dog wrote: »

Sorry BLF, but you come across as a very bitter person.

:rotfl: NR was owned by its shareholders, The Government have stolen it from us. :mad: Shareholders were prepared to inject fresh capital into NR, they werent given the opportunity to do so.

Before people say about it being insolvent or this or that, Insolvent/ Bankrupt Companies dont pay people 90000 a month, with around 70000 a month being paid to someone else on top of all the other salaries.

Fella

bristolleedsfan wrote: »

:rotfl: NR was owned by its shareholders, The Government have stolen it from us. :mad:

Before people say about it being insolvent or this or that, Insolvent companies dont pay people 90000 a month, with around 70000 a month being paid to someone else on top of all the other salaries.

Yes but I think it's fairly unequivocal that if the Govt hadn't stepped in with the guarantee that wouldn't have continued. I think NRK shares would have been worth zero if the Govt hadn't stepped in at all.