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On what possible basis do this group think they are entitled to more than what is being offered. If it wasn't for government loans they would have lost everything. Surely the risk of buying shares?
http://news.bbc.co.uk/1/hi/business/7254708.stm
http://news.bbc.co.uk/1/hi/business/7254708.stm
In reply to MG: Maybe *they* might have a view that the share prices plummet was exacerbated by the governments pathetic handling of the affair and that maybe had they not fudged it it might only have halved in value
It is of course the risk of buying shares as we discussed at length on here back then. I seem to recall a few on here getting their a*ses handed back to them on a plate at about £4.60-£5.00 a share
It is of course the risk of buying shares as we discussed at length on here back then. I seem to recall a few on here getting their a*ses handed back to them on a plate at about £4.60-£5.00 a share
In reply to MG:
Nothing has been offered yet. The governments (and BBCs) actions made a bad situation worse so were partially complicit. The net asset value is £4 per share. The govt is likely to offer below 25p.
MG - if your house had been compulsorarily purchased and you were offred less than 10% of its value you might protest.
Nothing has been offered yet. The governments (and BBCs) actions made a bad situation worse so were partially complicit. The net asset value is £4 per share. The govt is likely to offer below 25p.
MG - if your house had been compulsorarily purchased and you were offred less than 10% of its value you might protest.
In reply to MG:
>"On what possible basis..."
None, but if you'd just lost a lot of money wouldn't you explore any avenues open to you to get as much of it as you can back?
>"On what possible basis..."
None, but if you'd just lost a lot of money wouldn't you explore any avenues open to you to get as much of it as you can back?
In reply to Simon Lee:
Not if the alternative had been 0%
>
>
> MG - if your house had been compulsorarily purchased and you were offred less than 10% of its value you might protest.
>
> MG - if your house had been compulsorarily purchased and you were offred less than 10% of its value you might protest.
Not if the alternative had been 0%
In reply to JLS:
Fair point
> (In reply to MG)
>
> >"On what possible basis..."
>
> None, but if you'd just lost a lot of money wouldn't you explore any avenues open to you to get as much of it as you can back?
>
> >"On what possible basis..."
>
> None, but if you'd just lost a lot of money wouldn't you explore any avenues open to you to get as much of it as you can back?
Fair point
In reply to Simon Lee:
How did loaning the bank millions make the situation worse? Without the loans they would have gone bankrupt.
> (In reply to MG)
>
>
> Nothing has been offered yet. The governments (and BBCs) actions made a bad situation worse so were partially complicit.
>
>
> Nothing has been offered yet. The governments (and BBCs) actions made a bad situation worse so were partially complicit.
How did loaning the bank millions make the situation worse? Without the loans they would have gone bankrupt.
In reply to MG: Not if the alternative had been 0%
So you are saying that you would accept without protest the 10% value because it was a take it or leave offer. I scarcely think so. You would be sobbing into the camera, surrounded by family photos bleating about council bullies.
So you are saying that you would accept without protest the 10% value because it was a take it or leave offer. I scarcely think so. You would be sobbing into the camera, surrounded by family photos bleating about council bullies.
In reply to woolsack: Pathetic handling... I think they've done rather well on this. NR got themselves into trouble, no fault of the govt, govt has made the best of a bad job.
And I think they've been particularly strong facing down Richard 'firesale' Bransons and other's derisory offers, despite the inevitable carping that it has attracted.
And I think they've been particularly strong facing down Richard 'firesale' Bransons and other's derisory offers, despite the inevitable carping that it has attracted.
In reply to Simon Lee:
It is not the government arbitrarily deciding to compulsorily buy a bank for 10% of its value. It is propping up a failed business. The analogy with a house would be if my house had burnt down when I had no insurance and the council came along and offered me 10% of its initial value. I'd jump at it, not complain.
> (In reply to MG) Not if the alternative had been 0%
>
>
> So you are saying that you would accept without protest the 10% value because it was a take it or leave offer. I scarcely think so. You would be sobbing into the camera, surrounded by family photos bleating about council bullies.
>
>
> So you are saying that you would accept without protest the 10% value because it was a take it or leave offer. I scarcely think so. You would be sobbing into the camera, surrounded by family photos bleating about council bullies.
It is not the government arbitrarily deciding to compulsorily buy a bank for 10% of its value. It is propping up a failed business. The analogy with a house would be if my house had burnt down when I had no insurance and the council came along and offered me 10% of its initial value. I'd jump at it, not complain.
In reply to MG:
The situation was made by the cack handling of the PR, leading to public crisis of confidenec. Darling dragged his heels about guaranteeing deposits, they loaned the money so publicly rejecting Lloyds TSB offer and Peston's scaremongering.
The situation was made by the cack handling of the PR, leading to public crisis of confidenec. Darling dragged his heels about guaranteeing deposits, they loaned the money so publicly rejecting Lloyds TSB offer and Peston's scaremongering.
In reply to MG:
Compulsory purchase is usually would be when they wanted your house to make way for a new road or runway. I thought everyone knew that.
Compulsory purchase is usually would be when they wanted your house to make way for a new road or runway. I thought everyone knew that.
In reply to MG:
Chancers, if the government called their bluff and withdrew the proposal to back NR and let it go into liquidation while keeping the guarantees to savers they would get nothing. It would also make a lot of other BS worry about their situation so they may stop being greedy and sort things out themselves.
It is what should have happened with hindsight. There would then have been the situation of the banks helping each other out and getting lower profits or more of them going to the wall.
Chancers, if the government called their bluff and withdrew the proposal to back NR and let it go into liquidation while keeping the guarantees to savers they would get nothing. It would also make a lot of other BS worry about their situation so they may stop being greedy and sort things out themselves.
It is what should have happened with hindsight. There would then have been the situation of the banks helping each other out and getting lower profits or more of them going to the wall.
In reply to Simon Lee:
?? Your point?
> (In reply to MG)
>
>
> Compulsory purchase is usually would be when they wanted your house to make way for a new road or runway. I thought everyone knew that.
>
>
> Compulsory purchase is usually would be when they wanted your house to make way for a new road or runway. I thought everyone knew that.
?? Your point?
In reply to MG: ?? Your point?
My point is that compulsory purchase is nothing to do with your house burning down and the council offering yoiu 10% of its initial value.
I don't know what you call that scenario but its not compulsory purchase.
My point is that compulsory purchase is nothing to do with your house burning down and the council offering yoiu 10% of its initial value.
I don't know what you call that scenario but its not compulsory purchase.
In reply to Simon Lee: I think it was an analogy. Use your imagination a bit!
In reply to Simon Lee:
> (In reply to MG) ?? Your point?
>
> My point is that compulsory purchase is nothing to do with your house burning down and the council offering yoiu 10% of its initial value.
>
I know. Read my post again. You are seem to be claiming that the government are trying to buy NR for 10% of its value. They are not. Its value is £0 as it would have gone bankrupt without government support so the shareholders are doing rather well. I am pointing out the situation is much closer to being offered 10% of the value of your house that has just burnt down than your attempt at an analogy with a compulsory purchase. >
> My point is that compulsory purchase is nothing to do with your house burning down and the council offering yoiu 10% of its initial value.
>
In reply to MG: I know. Read my post again.
The government is the largest creditor but that credit is backed by real estate whose value greatly exceeds the credit. The FSA judged NR to be operating acceptably. The normal mechanisms of banking have tempoarily gummed up - possibly for a long time. The BoE is the lender of last resort in this situation. To say Northern Rock is like a house that has burnt down without insurance is an analogy that is neither enlightening or entertaining and so by my measure of a good analogy, crap. It doesnt require me to re-read your post to reaffirm that it is crap.
The government is the largest creditor but that credit is backed by real estate whose value greatly exceeds the credit. The FSA judged NR to be operating acceptably. The normal mechanisms of banking have tempoarily gummed up - possibly for a long time. The BoE is the lender of last resort in this situation. To say Northern Rock is like a house that has burnt down without insurance is an analogy that is neither enlightening or entertaining and so by my measure of a good analogy, crap. It doesnt require me to re-read your post to reaffirm that it is crap.
In reply to MG:
a general and total loss of confidence by investors isn't really in anyone's interests if we want any kind of stability
Has anyone considered that if a large bank really went under people's wages paid in would disappear and lots of people would suddenly be seeking benefit. A bank has not failed since computerised payrolls appeared. You would never get your wages.., let alone savings
a general and total loss of confidence by investors isn't really in anyone's interests if we want any kind of stability
Has anyone considered that if a large bank really went under people's wages paid in would disappear and lots of people would suddenly be seeking benefit. A bank has not failed since computerised payrolls appeared. You would never get your wages.., let alone savings
In reply to Simon Lee:
For the benefit of soceity at large, not the shareholders of a bank that has screwed up.
To say Northern Rock is like a house that has burnt down without insurance is an analogy that is neither enlightening or entertaining and so by my measure of a good analogy, crap.
If it is so crap why did the NR have to go cap in hand to the government in the first place?
> (In reply to MG) I know. Read my post again.
>
>
> The government is the largest creditor but that credit is backed by real estate whose value greatly exceeds the credit. The FSA judged NR to be operating acceptably. The normal mechanisms of banking have tempoarily gummed up - possibly for a long time. The BoE is the lender of last resort in this situation.
>
>
> The government is the largest creditor but that credit is backed by real estate whose value greatly exceeds the credit. The FSA judged NR to be operating acceptably. The normal mechanisms of banking have tempoarily gummed up - possibly for a long time. The BoE is the lender of last resort in this situation.
For the benefit of soceity at large, not the shareholders of a bank that has screwed up.
To say Northern Rock is like a house that has burnt down without insurance is an analogy that is neither enlightening or entertaining and so by my measure of a good analogy, crap.
If it is so crap why did the NR have to go cap in hand to the government in the first place?
In reply to Anonymous:
But this is pretty much what has happened. The government has fulfilled its role in preventing the catasrophes you outline. Its role is to protect savers etc, not shareholders.
> (In reply to MG)
>
> a general and total loss of confidence by investors isn't really in anyone's interests if we want any kind of stability
>
>
> Has anyone considered that if a large bank really went under people's wages paid in would disappear and lots of people would suddenly be seeking benefit. A bank has not failed since computerised payrolls appeared. You would never get your wages.., let alone savings
>
> a general and total loss of confidence by investors isn't really in anyone's interests if we want any kind of stability
>
>
> Has anyone considered that if a large bank really went under people's wages paid in would disappear and lots of people would suddenly be seeking benefit. A bank has not failed since computerised payrolls appeared. You would never get your wages.., let alone savings
But this is pretty much what has happened. The government has fulfilled its role in preventing the catasrophes you outline. Its role is to protect savers etc, not shareholders.
In reply to MG: If it is so crap why did the NR have to go cap in hand to the government in the first place?
If you are familiar with the regular instance of profitable companies crippled by cashflow then you should know the answer. Even in Administration such companies have value that another company will pay for.
Barclays has also had to borrow, or go cap in handd as you would have it, from the government.
If you are familiar with the regular instance of profitable companies crippled by cashflow then you should know the answer. Even in Administration such companies have value that another company will pay for.
Barclays has also had to borrow, or go cap in handd as you would have it, from the government.
In reply to Simon Lee:
Simon, you appear to be ignoring the blindingly obvious point taht a biusiness that runs out of money goes bust. The fact that it has assets that it can sell after it has gone bust to help pay off some of its liabilities does not affect the fact that it has gone bust.
The only reason Northern Rock still exists is that the government has pumped tax payers money into it to prop it up. Without the government and the Bank of England then the tax payers wouldn't get a penny. If NR is such a good business then why is it only the governenment who are prepared to loan it cash? It appeared a decent business before the credit crunch but recent events have demonstrated the whole thing was built on sand.
Cash flow and liquidity is not an optional extra in a business - it is a necessity.
Simon, you appear to be ignoring the blindingly obvious point taht a biusiness that runs out of money goes bust. The fact that it has assets that it can sell after it has gone bust to help pay off some of its liabilities does not affect the fact that it has gone bust.
The only reason Northern Rock still exists is that the government has pumped tax payers money into it to prop it up. Without the government and the Bank of England then the tax payers wouldn't get a penny. If NR is such a good business then why is it only the governenment who are prepared to loan it cash? It appeared a decent business before the credit crunch but recent events have demonstrated the whole thing was built on sand.
Cash flow and liquidity is not an optional extra in a business - it is a necessity.
In reply to Simon Lee:
The only prospective buyers in this instance both stated that they would only buy the business if they didn't have to pay the governemnt its money back for a sustianed period - i.e. they wanted the Government to subsidise the business (i.e. take on the risk) while they took the profits.
> (In reply to MG)
>
> If you are familiar with the regular instance of profitable companies crippled by cashflow then you should know the answer. Even in Administration such companies have value that another company will pay for.
>
>
> If you are familiar with the regular instance of profitable companies crippled by cashflow then you should know the answer. Even in Administration such companies have value that another company will pay for.
>
The only prospective buyers in this instance both stated that they would only buy the business if they didn't have to pay the governemnt its money back for a sustianed period - i.e. they wanted the Government to subsidise the business (i.e. take on the risk) while they took the profits.
In reply to MG:
yes,
but what would happen if banks were perceived as so risky that all investors tried to get out quickly?
yes,
but what would happen if banks were perceived as so risky that all investors tried to get out quickly?
In reply to Anonymous:
Much as you outlined I guess. Which is why we (the country) try and avoid it happening!
> (In reply to MG)
>
> yes,
> but what would happen if banks were perceived as so risky that all investors tried to get out quickly?
>
> yes,
> but what would happen if banks were perceived as so risky that all investors tried to get out quickly?
Much as you outlined I guess. Which is why we (the country) try and avoid it happening!
In reply to Chris James: Simon, you appear to be ignoring the blindingly obvious point taht a biusiness that runs out of money goes bust.
Perhaps we should stop using analogies and a bank is a little diffrent to a normal trade.
Without going off on too much of a tangent consider that because a bank is unable to refinance its asset backed loan book anywhere but the BoE doesnt necessarily mean that it doesnt have an inherent value if we accept that the 'credit crunch isnt going to last forever. Loss making businesses are often sold for good money not just for the value of their assets but also if they are deemed to have the potential to be profitabel again. Northern Rock holds the title deeds to millions? of homes. Under good management, better market conditions, resytructuring it could become a successful bank again. The homes they hold the title deeds to are not worthless. In fact as I undertsand it they currently exceed the value of the government loans to the tune of £4 per share.
Perhaps we should stop using analogies and a bank is a little diffrent to a normal trade.
Without going off on too much of a tangent consider that because a bank is unable to refinance its asset backed loan book anywhere but the BoE doesnt necessarily mean that it doesnt have an inherent value if we accept that the 'credit crunch isnt going to last forever. Loss making businesses are often sold for good money not just for the value of their assets but also if they are deemed to have the potential to be profitabel again. Northern Rock holds the title deeds to millions? of homes. Under good management, better market conditions, resytructuring it could become a successful bank again. The homes they hold the title deeds to are not worthless. In fact as I undertsand it they currently exceed the value of the government loans to the tune of £4 per share.
In reply to Anonymous: yes,
but what would happen if banks were perceived as so risky that all investors tried to get out quickly?
It would be a classic run on the banks
but what would happen if banks were perceived as so risky that all investors tried to get out quickly?
It would be a classic run on the banks
In reply to Simon Lee:
Even in Administration such companies have value that another company will pay for.
But not in this case. The bidders all wanted subsidies/guarantees.
Without the government funding no bidder would offer anything for NRK, it was and is worthless without this support.
Every year the management were rewarded by shareholders with 100% bonuses if they increased profits by 10%. They did this year in year out by securitising more and more of their loans. This was done to a much greater extent than any of the other mortgage banks. The management had created the riskiest financing structure of the UK mortgage banks and shareholders had rewarded them for it. The share price went up and up and the risk went up and up. NRK ws the canary down the coal mine. Then pop.
IMHO, shareholders deserve nothing.
I expect the gubmint to be weak and award some token compensation, what 50p a share?
lsn
Even in Administration such companies have value that another company will pay for.
But not in this case. The bidders all wanted subsidies/guarantees.
Without the government funding no bidder would offer anything for NRK, it was and is worthless without this support.
Every year the management were rewarded by shareholders with 100% bonuses if they increased profits by 10%. They did this year in year out by securitising more and more of their loans. This was done to a much greater extent than any of the other mortgage banks. The management had created the riskiest financing structure of the UK mortgage banks and shareholders had rewarded them for it. The share price went up and up and the risk went up and up. NRK ws the canary down the coal mine. Then pop.
IMHO, shareholders deserve nothing.
I expect the gubmint to be weak and award some token compensation, what 50p a share?
lsn
In reply to Simon Lee:
>Without going off on too much of a tangent consider that because a bank is unable to refinance its asset backed loan book anywhere but the BoE doesnt necessarily mean that it doesnt have an inherent value if we accept that the 'credit crunch isnt going to last forever.
Now replace bank with small company and see what would have happened, the liquidators would have been called in.
I know, it happened to our business when large companies and councils delayed paying us, and the bank refused to increase the overdraft till the money came in. At the end of it all it cost four jobs and we lost around £7000 in fees to liquidators, and got about the same back.
NR is in the same position we were, it was just that they were so big the government would not let it fold.
>Without going off on too much of a tangent consider that because a bank is unable to refinance its asset backed loan book anywhere but the BoE doesnt necessarily mean that it doesnt have an inherent value if we accept that the 'credit crunch isnt going to last forever.
Now replace bank with small company and see what would have happened, the liquidators would have been called in.
I know, it happened to our business when large companies and councils delayed paying us, and the bank refused to increase the overdraft till the money came in. At the end of it all it cost four jobs and we lost around £7000 in fees to liquidators, and got about the same back.
NR is in the same position we were, it was just that they were so big the government would not let it fold.
In reply to sutty: Now replace bank with small company and see what would have happened, the liquidators would have been called in.
I quite agree. The difference is self interest. The govt has a lot to lose if the banking system breaks down. The banking system is based on confidence. If that confidence goes everyone loses. I would have more respect if the government/fsa/boe had acted more decisively (suspending shares) or more covertly (lending on the sly) at the outset rather than muddling through as they have done. There are mutiple valid ways of looking at the whole Northern Rock saga which makes it so fascinating. whole
I quite agree. The difference is self interest. The govt has a lot to lose if the banking system breaks down. The banking system is based on confidence. If that confidence goes everyone loses. I would have more respect if the government/fsa/boe had acted more decisively (suspending shares) or more covertly (lending on the sly) at the outset rather than muddling through as they have done. There are mutiple valid ways of looking at the whole Northern Rock saga which makes it so fascinating. whole
In reply to Simon Lee:
As the north Cornish sea cliff said, shareholders actively encouraged the risky business model at Northern Rock. If they get too large a payout from the government when it is nationalised it will encourage such risky strategies in banks in the future as shareholders will know that they will get bailed out in the event of it all going tits up.
Any business (in fact anything) is worth only what someone is prepared to pay for it. The government tried get someone to buy Northern Rock but couldn't. Therefore it is worth nothing.
As the north Cornish sea cliff said, shareholders actively encouraged the risky business model at Northern Rock. If they get too large a payout from the government when it is nationalised it will encourage such risky strategies in banks in the future as shareholders will know that they will get bailed out in the event of it all going tits up.
Any business (in fact anything) is worth only what someone is prepared to pay for it. The government tried get someone to buy Northern Rock but couldn't. Therefore it is worth nothing.
In reply to lowersharpnose:
50p a share?
I think that should just about cover the canary's funeral costs.
50p a share?
I think that should just about cover the canary's funeral costs.
In reply to El Greyo: The government tried get someone to buy Northern Rock but couldn't. Therefore it is worth nothing.
At the present time.
At the present time.
In reply to Simon Lee:
Yes, but the business is bust. It has debts that it needs to pay and no money (of its own) to pay them with.
You appear to be advocating the government continuing to provide state for an idefinite period aid (which I understand to be illegal under competition laws) until such time that NR can trade itself into a positive cash flow situation and until the shares become worth something.
Why should my and all other tax payer's money be used to subsidise shareholders who take the profits but want to pass all the risk onto me?
By simply nationalising and subsequently refloating when the NR balance sheet looks less crazy, then the savers will not lose out, confidence is maintained in the banking system and the reckless are punished.
Yes, but the business is bust. It has debts that it needs to pay and no money (of its own) to pay them with.
You appear to be advocating the government continuing to provide state for an idefinite period aid (which I understand to be illegal under competition laws) until such time that NR can trade itself into a positive cash flow situation and until the shares become worth something.
Why should my and all other tax payer's money be used to subsidise shareholders who take the profits but want to pass all the risk onto me?
By simply nationalising and subsequently refloating when the NR balance sheet looks less crazy, then the savers will not lose out, confidence is maintained in the banking system and the reckless are punished.
In reply to lowersharpnose:
Agree.
Simon, citing insolvency is fine, except that in Admin, Admin Receivership or even worse, liquidation, the shareholders get bugger all. They are unsecured creditors.
What arethe assets here? the loan book has been securitised and it is not strictly asset backed, as the company is unable to realise those assets- i.e. homes.
Agree.
Simon, citing insolvency is fine, except that in Admin, Admin Receivership or even worse, liquidation, the shareholders get bugger all. They are unsecured creditors.
What arethe assets here? the loan book has been securitised and it is not strictly asset backed, as the company is unable to realise those assets- i.e. homes.
In reply to lowersharpnose:
Salt-of-the-earth protest from Geordie pensioners might influence the price rather more than the independent body.
Salt-of-the-earth protest from Geordie pensioners might influence the price rather more than the independent body.
In reply to Simon Lee:
At the point the government intervened, northern rock could not pay its debts as they fell due i.e. it was insolvent.
No buyer has come forward to buy the bank on an as is basis - Therefore it has a market value of zero and the NAV has been realised.
If the government wanted to play fair, it would have been able to buy the companies shares for pennies each after the banks doors had been closed to the public for a few days because the share price would have simply collapsed. Share price doesn't automatically reflect NAV, it reflects the amount a potential buyer wants to have a piece of a particular company.
The shareholders have failed to excerise proper governence of their company and the government has had to step to protect borrowers and the banking system itself.
So, the shareholders are not entitled to any significant compensation for their shares, nor do they have any moral entitlement to a cash handout.
Hopefully the government will make a killing on this deal and use the money to send some money to the farepak victims.
> (In reply to El Greyo) The government tried get someone to buy Northern Rock but couldn't. Therefore it is worth nothing.
>
>
> At the present time.
>
>
> At the present time.
At the point the government intervened, northern rock could not pay its debts as they fell due i.e. it was insolvent.
No buyer has come forward to buy the bank on an as is basis - Therefore it has a market value of zero and the NAV has been realised.
If the government wanted to play fair, it would have been able to buy the companies shares for pennies each after the banks doors had been closed to the public for a few days because the share price would have simply collapsed. Share price doesn't automatically reflect NAV, it reflects the amount a potential buyer wants to have a piece of a particular company.
The shareholders have failed to excerise proper governence of their company and the government has had to step to protect borrowers and the banking system itself.
So, the shareholders are not entitled to any significant compensation for their shares, nor do they have any moral entitlement to a cash handout.
Hopefully the government will make a killing on this deal and use the money to send some money to the farepak victims.
In reply to Tyler:
I don't think Darling & Brown have the balls to offer nowt, much as it is deserved.
I'm rather mystified why trading in the shares is suspended.
lsn
I don't think Darling & Brown have the balls to offer nowt, much as it is deserved.
I'm rather mystified why trading in the shares is suspended.
lsn
In reply to Nevis-the-cat: What arethe assets here? the loan book has been securitised and it is not strictly asset backed, as the company is unable to realise those assets- i.e. homes.
Northern Rock has been a political rather than business issue ever since Peston let the cat out of the bag. Normal business conventions have long since departed in this case. It is all about PR and positioning and blame between the various interested parties.
Northern Rock has been a political rather than business issue ever since Peston let the cat out of the bag. Normal business conventions have long since departed in this case. It is all about PR and positioning and blame between the various interested parties.
In reply to Simon Lee:
To be fair the effectiveness of my riot will be hampered less by the numbers involved but more by the fact that it'll take place in front of the TV whilst I enjoy a nice cup of tea!
Whilst I do feel sorry for the large number of small shareholders who will lose out this is tempered by the fact that most of them got these shares when the NR demutualised (actually I only heard thet, is it true?) and the thought of those hedge fund managers, who waded in after the crisis had begun, getting sacked as a result.
> A one man riot - is that possible ?
To be fair the effectiveness of my riot will be hampered less by the numbers involved but more by the fact that it'll take place in front of the TV whilst I enjoy a nice cup of tea!
Whilst I do feel sorry for the large number of small shareholders who will lose out this is tempered by the fact that most of them got these shares when the NR demutualised (actually I only heard thet, is it true?) and the thought of those hedge fund managers, who waded in after the crisis had begun, getting sacked as a result.
In reply to Nevis-the-cat:
What are the assets here?
The assets of NRK are the mortgage loans it has made.
The liabilities are the debts NRK owe to the money markets to fund its loan book.
The difference between these two large numbers should give an indication of what NRK is worth. When I last looked at this, NRK had loans on its books worth around £114 billion funded by money market borrowings of about £112 billion. That gave about 1-2 billion of value to NRK shares. This was eroded fast by the higher borrowing charges NRK faced during the credit crunch and the rates charged by the BoE.
One question, is what would these assets be worth if sold? I doubt they would fetch more than say 97p in the £1, maybe less than 95p in the £.
This mortgage bank is no more. It is an ex mortgage bank.
lsn
What are the assets here?
The assets of NRK are the mortgage loans it has made.
The liabilities are the debts NRK owe to the money markets to fund its loan book.
The difference between these two large numbers should give an indication of what NRK is worth. When I last looked at this, NRK had loans on its books worth around £114 billion funded by money market borrowings of about £112 billion. That gave about 1-2 billion of value to NRK shares. This was eroded fast by the higher borrowing charges NRK faced during the credit crunch and the rates charged by the BoE.
One question, is what would these assets be worth if sold? I doubt they would fetch more than say 97p in the £1, maybe less than 95p in the £.
This mortgage bank is no more. It is an ex mortgage bank.
lsn
In reply to Simon Lee:
Normal business conventions should not go out of the window. It may be a politcal problem, but if the government step in here and do a deal with the shareholders, they will be setting a precedent.
NR is the victim of poor management and over exposure to a flawed investment vehicle, i.e. the securitisation of the US sub prime loan book. The corporate decisions and poor governance is not the fault of the government. They may leave themselves open to criticism over how they handled it post failure, but it is the fault of the board that they find themselves in a position where they are unable to honour mortgage fdunding committments through their poor rating within inter bank lending.
Whilst i think Alchemy were originally the men for the deal in the 90's and not Phoenix, the Government rightly left Rover to the market and existing legislation.
Normal business conventions should not go out of the window. It may be a politcal problem, but if the government step in here and do a deal with the shareholders, they will be setting a precedent.
NR is the victim of poor management and over exposure to a flawed investment vehicle, i.e. the securitisation of the US sub prime loan book. The corporate decisions and poor governance is not the fault of the government. They may leave themselves open to criticism over how they handled it post failure, but it is the fault of the board that they find themselves in a position where they are unable to honour mortgage fdunding committments through their poor rating within inter bank lending.
Whilst i think Alchemy were originally the men for the deal in the 90's and not Phoenix, the Government rightly left Rover to the market and existing legislation.
In reply to Tyler: To be fair the effectiveness of my riot will be hampered less by the numbers involved but more by the fact that it'll take place in front of the TV whilst I enjoy a nice cup of tea!
Sounds like a very English sort out riot (for a rabid Celt)
Sounds like a very English sort out riot (for a rabid Celt)
In reply to Nevis-the-cat:
What should, could, would etc is all a matter of viewpoint, perception and positioning. In case you havent noticed its not a fair and just world.
What should, could, would etc is all a matter of viewpoint, perception and positioning. In case you havent noticed its not a fair and just world.
In reply to Simon Lee:
Well as William Cobett almost said "I defy you to agitate any fellow with a nice cup of tea in his hand"
> Sounds like a very English sort out riot
Well as William Cobett almost said "I defy you to agitate any fellow with a nice cup of tea in his hand"
In reply to Nevis-the-cat: "NR is the victim of poor management" Yep - agreed - went tits up when the FD left in 06.
"and over exposure to a flawed investment vehicle, i.e. the securitisation of the US sub prime loan book" - is/was that really their problem? I thought the problem was that they couldn't raise wholesale money, which I agree is caused by others' exposure to US mortgage backed securities that makes them unwilling to lend. We haven't seen NR's level of writedowns yet - and there are super-safe building societies with no US exposure at all that can't raise funding.
"and over exposure to a flawed investment vehicle, i.e. the securitisation of the US sub prime loan book" - is/was that really their problem? I thought the problem was that they couldn't raise wholesale money, which I agree is caused by others' exposure to US mortgage backed securities that makes them unwilling to lend. We haven't seen NR's level of writedowns yet - and there are super-safe building societies with no US exposure at all that can't raise funding.
In reply to Simon Lee:
There is a little snippet in FT today, reporting that Cantor Spreadfair are making a market in the level of compensation that will be paid.
At the moment there is not a lot of volume with a quote of 25-35p.
I think that trading in NRK shares should have been allowed to continue.
lsn
There is a little snippet in FT today, reporting that Cantor Spreadfair are making a market in the level of compensation that will be paid.
At the moment there is not a lot of volume with a quote of 25-35p.
I think that trading in NRK shares should have been allowed to continue.
lsn
In reply to MG: Reading a couple of articles this morning looks to me like its stuffed, they are off loading the good debt at a rate of knotts and will be left with the dross that cannot remortgage elsewhere and will eventually default, mishandled by all concerned on a new scale of spectacular.
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