A disaster of Brown’s making for which we are paying
Some pertinent comments - - -
Christina
SKY NEWS 4.8.09
Northern Rock: Former Bidder's Cash Warning
A top businessman who tried to buy Northern Rock has told Sky News that taxpayers face a "long wait" before they see a return from the nationalised bank.
Luqman Arnold, a former boss of Abbey, was a serious bidder for the bank before it was taken into state ownership in February 2008.
Speaking on Jeff Randall Live he said that the company is now worth a lot less than it was in 2008.
"A year ago the brand had value... when the decision was taken that all the money would go to repaying the Government, you under-invested in the bank, you under-invested in the business.
"I think that makes it more difficult to resuscitate.
"The taxpayer certainly owns the rubbish, but maybe by selling the good stuff they get some money back on that, but the challenge is to resuscitate a bank which has obviously been through a very strange year."
His comments came after the bank announced a loss of £724m for the first six months of 2009 as its bad debts tripled.
The Newcastle based bank wrote off £602m in bad loans and expects that figure to be similar in the second half of 2009.
The bank revealed that 6.4% of Together mortgages - the 125% loan-to-value product now withdrawn - are more than three months in arrears, up from 2.14% a year ago.
Almost 40% of homeowners who have a mortgage with Northern Rock now find themselves in negative equity.
Mr Arnold also said his team would not have followed the Government's approach to bailing out Northern Rock.
"I think we would have probably handled it a little differently because our plan was to keep it alive and to make a success of it."
But Mr Arnold did praise the input of Northern Rock's workforce.
"The Geordie spirit is amazing, you know, the loyalty of the staff to that bank is fantastic."
A number of companies tried to buy Northern Rock in November 2007.
They included Sir Richard Branson's Virgin Money, two private equity firms and Mr Arnold's investment group, Olivant.
POLITICS HOME 4.8.09
Broadcast comments
Cable: Govt's Northern Rock embarassment will cost the taxpayer
07:55 Vince Cable MP, Liberal Democrats Treasury spokesman
Mr Cable warned that government "embarrassment" over the nationalised Northern Rock, could mean a quick sale of the lender which would be a bad deal of taxpayers.
"The government has always been embarrassed by the fact it had to nationalise it," he said.
"It wants to show the market that it is going back to business as usual, which I think is completely the wrong strategy."
He added: "Overall the taxpayer will take quite a heavy loss on this overall transaction they've got to be patient they've got to hold on to it"
He said that the government should hold on to the bank and force it to act as a "responsible" lender to the economy.
"It should operate as a responsible mortgage lender and it should operate as a nationalised bank until we get a very good price for it."
Treasury "in no rush" to sell Northern Rock, says minister
BBC News 12:34 Pearson MP, Treasury minister
•
Mr Pearson played down suggestions the government was looking to sell off Northern Rock at the earliest opportunity, saying that ministers were "in no rush" to privatise the nationalised bank.
"We're in no rush about this. What we want Northern Rock to do is continue lending, as I say £14bn over the next two years at decent rates," he said, adding that the lender would be privatised "when we can get the best possible deal for the taxpayer".
He also said that the amount already paid back by Northern Rock was a cause to have confidence, despite the losses announced today.
"The fact they paid back £18bn should give people confidence," he said. [Hardly, with losses mounting! -cs]
Recovering banks "still on life support" says McFall
BBC News 24 14:15
• John McFall, Chair Treasury Select Committee
Mr McFall said that despite the profits announced by some banks this week, the financial crisis was not over, and the financial industry was still on "life support"
"Banks are on life support and the taxpayers and the government need to be there holding their hands," he said.
He also called for a structural reforms in banks so in future taxpayers would not be required to bail out failing banks.
"When companies fail they and their shareholder should take the loss," he said.
Mr McFall also said that Northern Rock had been an “outlier” and had been the worst case in terms of people falling behind on their mortgage repayments, and so its losses were not a surprise.
“They are the top of the league in terms of those who had fallen behind on their mortgages” he said.
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