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Rock to be nationalised

Robert Peston | 15:20 UK time, Sunday, 17 February 2008

The Chancellor will at 4pm this afternoon announce that the Rock is to be nationalised.

He and the Prime Minister have finally decided - on the clear advice of the Treasury - that taxpayers interests would be best protected by taking the troubled bank into public ownership.

The decision will be a blow to the bank's shareholders - who will receive next-to-nothing in the short term for their shares.

Emergency legislation to nationalise the bank will be introduced into the Commons tomorrow afternoon.

I will file more on this as time permits later.

Comments   Post your comment

  • 1.
  • At 04:03 PM on 17 Feb 2008,
  • ARJ wrote:

Interesting ? Especially before Barclays release their figures. Precussor to more doom & gloom ?

  • 2.
  • At 04:09 PM on 17 Feb 2008,
  • Marc Calladine wrote:

I bet the share holders are kicking themselves now. They have nope of seeing any of the their cash now they should have accepted the Virgin deal.

  • 3.
  • At 04:14 PM on 17 Feb 2008,
  • Olumide wrote:

What is the impact of nationalising the company and also is it in the interest of the shareholders and can someone explain all this in layman terms

  • 4.
  • At 04:16 PM on 17 Feb 2008,
  • Euan wrote:

Looking forward to more from you on this. What are the practical implications for those who have mortgages with NR?

  • 5.
  • At 04:16 PM on 17 Feb 2008,
  • roger Leigh wrote:

Is this just good timing before Barclays release their annual figures?

  • 6.
  • At 04:16 PM on 17 Feb 2008,
  • Shaun Crowther wrote:

So, Northern Rock customers will get next to nothing for their shares (in the short-term at least). When will these people finally wake up and realise that playing the stock market is no different to walking into a bookies, backing a horse and awaiting the outcome. The bottom line is blatantly obvious - if you can't stand the heat..................

  • 7.
  • At 04:23 PM on 17 Feb 2008,
  • paul wrote:

This nationalisation underlines jaw-dropping incompetence. Yet no-one in government or in the tripartite body has or will, lose their job. In fact, we see for example, that Mervyn King has just been re-appointed.

at last this uncertainty is over - perhaps now we can all move on!

  • 9.
  • At 04:40 PM on 17 Feb 2008,
  • Rakib Ahmed wrote:

I, personally, am glad it is happening. I think the government should have decided on it earlier - it did seem like more of a cop out NOT to do it. Sadly, there is a distinct lack of courage going around -demoralised by our stupid foreign wars, I expect- so this government couldn't get on with it earlier but had to wait to bury it under the news of Kosovan independence! As soon as government money was being used to prop the company up there was no other option. On a side note, nationalisation -perhaps, just the word itself- gives us all a sense of nationhood which is sorely lacking these days in the 'global village' we are all supposed to live in. That's how I feel anyway.

  • 10.
  • At 04:40 PM on 17 Feb 2008,
  • Ben Grumpie wrote:

I find the timing of the nationalisation announcement interesting. Earlier today it was reported that some big banks are to increase their dividends. Why was that leaked now and what are they afraid of? Now when you also consider that the US stock markets are closed tomorrow it looks to me as if there is a damage limitation exercise going on. Well you have to give the banks and the Chancellor some credit for treading carefully in a bear market!

  • 11.
  • At 04:42 PM on 17 Feb 2008,
  • Toby wrote:

This is bad news for everyone.

Nobody cares much for the shareholders, but it's tough on the employees of the bank.

The Directors have already made a pile out their business model so not much sympathy for them.

It's bad for New Labour, but they will no doubt try to wriggle out of any blame.

It's also bad for the reputation of the British bankig system and one can't help wondering if other failures will follow in due course.

The only people I feel sorry for are the British taxpayers, against who the banking industry and govt have conspired a fraud of massive proportions for the last 10 years.

The banking industry's incompetence, mismanagement, greed and recklessness, have finally burst the bubble of continuous profit making from ever increasing consumer debt. The full losses from sub-prime lending woes, whilst already huge, are still not yet fully revealed. What does this mean for banking consumers? UK Banking consumers will now inevitably own the Northern Rock because Nationalisation is the only option left which can repay the huge bank guarantee from the Bank of England. IBAS believe that Banking consumers will be left ‘shouldering the weight’ of multiple failures in the banking systems and the financial pain caused by bankers incompetence, mismanagement, greed and recklessness over the last decade will result in global financial pain which will cause damage for a long time to come.- Eddy Weatherill,chief executive, Independent Banking Advisory Service (IBAS)

  • 13.
  • At 04:48 PM on 17 Feb 2008,
  • Toby wrote:

This is bad news for everyone.

Nobody cares much for the shareholders, but it's tough on the employees of the bank.

The Directors have already made a pile out their business model so not much sympathy for them.

It's bad for New Labour, but they will no doubt try to wriggle out of any blame.

It's also bad for the reputation of the British bankig system and one can't help wondering if other failures will follow in due course.

The only people I feel sorry for are the British taxpayers, against who the banking industry and govt have conspired a fraud of massive proportions for the last 10 years.

  • 14.
  • At 04:50 PM on 17 Feb 2008,
  • Greg Kingston wrote:

Heaven help us. The lunatics have taken over the asylum.

I would love to believe this was a brilliantly choreographed set of moves over the past six months, by the first Real Labour Government since 1947, designed to ensure there is a large enough publicly owned banking institution in the heart of Labour country with the capability of looking after (one-family/one-home)home owners over the coming five years when global capital goes on strike and bailiff-backed evictions reach levels not seen since the depression (and before that the Irish Potato Famine). If not, it should have been.

  • 16.
  • At 04:52 PM on 17 Feb 2008,
  • James wrote:

What is all the fuss about?

NR should have gone to the dogs ages ago.

Lets not forget that shareholders hold a share in the value of a company. If the company is worth nothing, then neither are the shares.

Limited Liability means that the extent of the liability is limited to the price paid for the shares.

Why should NR shareholders (mostly some hedge funds who know _exactly_ what they are doing) get government bailout for their worthless stock... more say, than RailTrack or any number of other companies that have gone to the wall.

Please, lets stak talking with clarity about this whole debacle.

Facts - NR cannot service its loans. NR made a big mistake in its reading of the loan market, and the rates / covenants under which money would be available. NR chose a path that meant it leveraged its funds under deposit, meaning their entire business model was predecated on such loans being available. When they were not - it was insolvent. The book should have closed there - and the firm put into administration like any other.

The fact that we are now taking a £100bn loan portfolio onto the countries books just shows that Darling is having some kind of nervous breakdown.

(having trouble posting site isn't responding.. sorry for any duplicates)

  • 17.
  • At 04:52 PM on 17 Feb 2008,
  • Gary Anderson wrote:

A nationised Bank,100 billion robed from private pensions, a 500 million pound white elephant of a building for a scottish talking shop, personal debts in excess of 1.4 trillion, over 520 billion of goverment borrowing in the last 5 years, people going bankcrupt by the thousand, mass imigration, illegal war costing billions and thousands of lives, millions of names gone missing of a disk, 75% plus increase on domestic rates, huge rise in public sector employuess, cash for houours, HAVE WE ALL GONE MAD!!! young people cant even afford to buy a house. Get rid of Labour. Gordon Brown did this!!!

  • 18.
  • At 04:53 PM on 17 Feb 2008,
  • K Buckmaster wrote:

Darling has shown himself prone to BOTH panic (in response to Tory proposals) AND (here) dithering to the very end. He's like a learner driver been given a big truck. Lets hope he doesn't crash it.

The "prudent" course for the taxpayer would of course have been to let the Rock fall. I wonder if we'll end up saying "bring back Norman Lamont"? Cameron of course was his Black Wednesday advisor.

  • 19.
  • At 04:54 PM on 17 Feb 2008,
  • Andy wrote:

What will this mean for us staff? (the only people no one has given a single thought to).

There are nearly 5000 all in one site - and I expect we'll all be gone soon enough, at £200 per year of service.

  • 20.
  • At 04:54 PM on 17 Feb 2008,
  • Carmen Maria Villacampa wrote:

Question really, What does this mean for mortgage accounts with Northern Rock ?

  • 21.
  • At 04:54 PM on 17 Feb 2008,
  • David Logan wrote:

Richard Branson must be bitterly regretting his trip to China with Gordy now. What an opportunity to make £1 billion underwritten by the British tax payer! Best thing since railway privatisation. Darling has no good options left (except a dignified resignation perhaps).

  • 22.
  • At 04:54 PM on 17 Feb 2008,
  • Jacques Cartier wrote:

At last, GB has shown that he can make a decision. Perhaps there might be hope for him after all. The next choice is simple enough as well .... I'd say a re-privatisation is on the cards, pretty soon, too!

  • 23.
  • At 04:59 PM on 17 Feb 2008,
  • Michael Brett wrote:

Will the "independent valuation" of Northern Rock for shareholder compensation purposes be undertaken on a "going concern" or "break up" basis? Please ask the chancellor !

  • 24.
  • At 05:02 PM on 17 Feb 2008,
  • dexey wrote:

I do not understand this.
A business fails and I as a taxpayer have to fund it and we have a New Labour government?
Whose neck are we saving? The previous chancellor's?

  • 25.
  • At 05:03 PM on 17 Feb 2008,
  • Colm wrote:

I'm a depositor with the Irish brnach of Northern Rock. Banks in Ireland, and the rest of the eurozone, are regulated by the ECB. There are many banks in the eurozone who fell into liquidity difficulties as bad, and worse, as the situation that enveloped NR. However, the ECB provided liquidity to these banks quietly and in a manner that did not engender queues outside banks and threaten the collapse of the banking system.

I hope the UK authorities have learned the appropriate lesson from this fiasco: if you have a bank in trouble you must rescue it in complete secrecy. What has happened this afternoon is the logical conclusion of a series of regulatory missteps in the UK. Let's ensure there is never a repeat run.

  • 26.
  • At 05:03 PM on 17 Feb 2008,
  • Ben Grumpie wrote:

I find the timing of the nationalisation announcement interesting. Earlier today it was reported that some big banks are to increase their dividends. Why was that leaked now and what are they afraid of? Now when you also consider that the US stock markets are closed tomorrow it looks to me as if there is a damage limitation exercise going on. Well you have to give the banks and the Chancellor some credit for treading carefully in a bear market!

  • 27.
  • At 05:04 PM on 17 Feb 2008,
  • David wrote:

The legislation will enable other banks to be nationalised. Does this mean other banks are headed South?

  • 28.
  • At 05:11 PM on 17 Feb 2008,
  • Martin wrote:

"a blow to the bank's shareholders - who will receive next-to-nothing in the short term for their shares.'

Which is exactly what their shares are worth. Only this week some of the VC entities increased their holdings in the company thinking they might get a good deal.

The bank is worthless on the open market and the very minimum should be paid to the NR shareholders.

  • 29.
  • At 05:15 PM on 17 Feb 2008,
  • David M wrote:

This is a great move by the government. The Northern Rock is not a "bad" business in any sense it just lacked a strategy in case of such a "credit crunch" problem. In fact it's business model is a sound one, and will prove so.

Any business is subject to market shocks, but the banking sector is special, it is the corner stone of a free market economy. The intervention by the BoE (first) and now the Government demonstrates that faith can be placed in our banks, our money is safe. This view is central to a modern economy, lack of confidence in our banks would lead to significant problems (Imagine no one trust our banks!)

People can be fickle, a business does not go from bad to terrible overnight (well of course there are certain examples), it was exogenous affects that proved to be the problem for the Northern Rock. In reality, sound financial backing (I.e. readily available capital) makes the Northern Rock one of the most attractive banks out here. If I was the HSBC, Natwest etc.. I'd be quite annoyed.

In time this will be seen as a major and correct decision by this government.

  • 30.
  • At 05:17 PM on 17 Feb 2008,
  • mackem rocker wrote:

well Robert you finally got what you wanted the rock to be nationalised.....to all the staff at Doxford,where i work, and Gosforth along with all the branches we have rode the storm and now what? i wish everyone the best of luck and its gonna be a nightmare tomorrow at the office.
to all the so called no it alls who have slated the rock over the past few months on here i hope you never are in our position and have to go through the hell that we have the past 6 months....

  • 31.
  • At 05:18 PM on 17 Feb 2008,
  • Brian Golden wrote:

I am a small shareholder and am utterly stunned at the level of imcompetence I have experienced from investing in the UK.

I am prepared for shares to go up and down but what has happened has been unreal.

I would have assumed that a business model that could collapse in a day would never have got past the regulators.

That a bank run occurred is just incredible.

And now my shares have been confiscated.

This is worse than a banana republic.

To cap it all off I can just imagine the reaction in the UK if this happened in Ireland.

Well the evidence is clear. Any Irish joke I hear in the UK afer this episode is deeply, deeply ironic.

  • 32.
  • At 05:19 PM on 17 Feb 2008,
  • andy hill wrote:

So now we are carrying the costs of running this 'bank' will we have the nerve to quickly downsize it ?(ie make the required redundancies)

  • 33.
  • At 05:19 PM on 17 Feb 2008,
  • Scott W wrote:

I wonder what this will do to the share price of all the other banks?

It seems that regardless of how good a companies business model is the current climate is only interested in how much of a hit banks are going to take from any sub prime write-downs.

It makes you wonder whether this is a conspiracy by the banks to run the price of their shares down - so that they can buy them back for a song. And when the dust has settled everyone will realise that the businesses were good entities after all - and share prices will begin climbing again

  • 34.
  • At 05:20 PM on 17 Feb 2008,
  • Andrew White wrote:

This has been inevitable since the Rock first had to approach the BOE for emergency funds. Why has it taken so long for it to happen ?

My heart bleeds for the shareholders, especially the hedge funds SRM Global and RAB Capital, who chose to invest in a company that was sailing so very close to the wind and yet expect the public to bail them out.

  • 36.
  • At 05:21 PM on 17 Feb 2008,
  • Ross wrote:

JUST LET NORTHERN ROCK GO BUST. The shareholders lose all their money and all the other building societies move in and take over the existing mortgage loans. (Ref. Enron and British Gas accounts). I don't complain about my Marconi losses and neither should any other shareholders in any other companies. Some of the employees if they are any good will get jobs with other banks.

  • 37.
  • At 05:22 PM on 17 Feb 2008,
  • Rob wrote:

And its your fault, Robert Peston. If you hadn't blown this whole thing out of proportion we wouldn't have had a run on the bank, nor this whole furore about it all.

No doubt we'll now get the usual bleatings from those who fail to understand the nature of shareholding - it's not risk-free, and more importantly, since shareholders own the company, it's up to them to ensure that it's run correctly! We got some incredible nonsense from shareholders in Railtrack, who were happy to take dividends but didn't give a hoot about how their company was being run.

Now we'll have the same whingeing from those who took no interest in how their company was being mis-managed, yet expect a good return for their share of a company which only continues to exist because it's propped up by the rest of us - it's utterly pathetic!

  • 39.
  • At 05:24 PM on 17 Feb 2008,
  • Toby wrote:

This is bad news for everyone.

Nobody cares much for the shareholders, but it's tough on the employees of the bank.

The Directors have already made a pile out their business model so not much sympathy for them.

It's bad for New Labour, but they will no doubt try to wriggle out of any blame.

It's also bad for the reputation of the British bankig system and one can't help wondering if other failures will follow in due course.

The only people I feel sorry for are the British taxpayers, against who the banking industry and govt have conspired a fraud of massive proportions for the last 10 years.

  • 40.
  • At 05:24 PM on 17 Feb 2008,
  • mackem rocker wrote:

well Robert you finally got what you wanted the rock to be nationalised.....to all the staff at Doxford,where i work, and Gosforth along with all the branches we have rode the storm and now what? i wish everyone the best of luck and its gonna be a nightmare tomorrow at the office.

  • 41.
  • At 05:26 PM on 17 Feb 2008,
  • John O wrote:

At last! But as a taxpayer I don't understand why shareholders should get any compensation.
The business has failed, and would have failed utterly, weeks ago (seems like months!) if the Government hadn't stepped in with guarantees, using money that many taxpayers would have preferred being spent on supporting our armed forces. They are the ones deserving our sympathy, having to fight an illegal war at the Government's behest!
Another shining example of Brown's financial incompetence! (And moral ineptitude.)

  • 42.
  • At 05:30 PM on 17 Feb 2008,
  • Chas Lister wrote:

Goodbye £4000 per taxpayer. Down the pan you go.

It's £2000 now and BOUND to double because these things always do.

What a lying bunch of con artists these tax-payer-funded politicians are

Do they really think the public believe AD is doing this to 'safeguard taxpayers money'? Their only eyes are on the next election.

They would have saved our money if they had not issued the guarantees in the first place. Shareholders losing is fair risk alebeit painful for all concerned. S/h AND taxpayers having loss forced upon them is just putting insult upon injury.
*sigh*

  • 43.
  • At 05:32 PM on 17 Feb 2008,
  • D Smith wrote:

Yvette Cooper has just been wheeled out to put the "gloss" on the announcement.

Everything is wonderful ! and we the taxpayers should be grateful for what the Government has done. ??

  • 44.
  • At 05:34 PM on 17 Feb 2008,
  • Andrew White wrote:

This has been inevitable since the Rock first had to approach the BOE for emergency funds. Why has it taken so long for it to happen ?

  • 45.
  • At 05:37 PM on 17 Feb 2008,
  • Rob wrote:

And its your fault, Robert Peston. If you hadn't blown this whole thing out of proportion we wouldn't have had a run on the bank, nor this whole furore about it all.

  • 46.
  • At 05:38 PM on 17 Feb 2008,
  • Charles Wimpenny wrote:

We are told that the decision to nationalise Northern Rock is being taken in the taxpayers best interests, so with those interests in mind I propose another piece of emergency legislation whereby MPs' pension fund is changed to a money purchase scheme and Scotland is given independence.

  • 47.
  • At 05:39 PM on 17 Feb 2008,
  • Stephen Bruce wrote:

As a mortgagee with Northern Rock tied to a fixed rate deal surely now we would not be tied to them due to a technical change of ownership.
Does anyone know the answer to this?

  • 48.
  • At 05:40 PM on 17 Feb 2008,
  • Chas Lister wrote:

Goodbye £4000 per taxpayer. Down the pan you go.

It's £2000 now and BOUND to double because these things always do.

What a lying bunch of con artists these tax-payer-funded politicians are

Do they really think the public believe AD is doing this to 'safeguard taxpayers money'? Their only eyes are on the next election.

They would have saved our money if they had not issued the guarantees in the first place. Shareholders losing is fair risk alebeit painful for all concerned. S/h AND taxpayers having loss forced upon them is just putting insult upon injury.
*sigh*

  • 49.
  • At 05:44 PM on 17 Feb 2008,
  • john thomas wrote:

Now listen to squeals of dis may from the hedge fund fat cats who bet on making a fast buck and who have now lost big time!

But also listen very very carefully for the quiet whispered agreements of support to the tune of billions being overed to the other banks, lest they follow the very public NR route to ruin.

This is as much about giving smoke and mirrors cover to the other banks as it is about safeguarding taxpayers intrests.

  • 50.
  • At 05:46 PM on 17 Feb 2008,
  • PETE LEIGH wrote:

Why not sell off the mortgages to another bank at the market price, refund tax payers and savers their money in that order. Any left over refund share holders and then quickly close down the whole sorry mess. Lots of lessons to be learned!

  • 51.
  • At 05:48 PM on 17 Feb 2008,
  • Keith Pirelli wrote:

The hedge fund predator Jon Wood of SRM Global is going to so unhappy....think of that an unhappy hedge fund trader.....

  • 52.
  • At 05:49 PM on 17 Feb 2008,
  • Keith Pirelli wrote:

The hedge fund predator Jon Wood of SRM Global is going to so unhappy....think of that an unhappy hedge fund trader.....

  • 53.
  • At 05:53 PM on 17 Feb 2008,
  • PETE LEIGH wrote:

Why not sell off the mortgages to another bank at the market price, refund tax payers and savers their money in that order. Any left over refund share holders and then quickly close down the whole sorry mess. Lots of lessons to be learned!

  • 54.
  • At 05:55 PM on 17 Feb 2008,
  • john thomas wrote:

Now listen to squeals of dismay from the hedge fund fat cats who bet on making a fast buck and who have now lost big time!

But also listen very very carefully for the quiet whispered agreements of support to the tune of billions being overed to the other banks, lest they follow the very public NR route to ruin.

This is as much about giving smoke and mirrors cover to the other banks as it is about safeguarding taxpayers intrests.

  • 55.
  • At 06:14 PM on 17 Feb 2008,
  • Roger Tyler wrote:

Could Robert Peston tell us how much debt has come onto the government books through Northern Rock compared to how much has been put off the books through PFI in the NHS over the last ten years?

  • 56.
  • At 06:47 PM on 17 Feb 2008,
  • john thomas wrote:

Now listen to squeals of dismay from the hedge fund fat cats who bet on making a fast buck and who have now lost big time!

But also listen very very carefully for the quiet whispered agreements of support to the tune of billions being overed to the other banks, lest they follow the very public NR route to ruin.

This is as much about giving smoke and mirrors cover to the other banks as it is about safeguarding taxpayers intrests.

  • 57.
  • At 06:50 PM on 17 Feb 2008,
  • Dave wrote:

It is just a shame that this is all going to mean an attempt by the shareholders to sue the taxpayer for some compensation.

Well lets hope the right thing is done this time. The shareholders shouldnt receive a penny, they dont deserve a penny. The taxpayer has lost a lot of money propping up a company which is insolvent. Let the chancelloer announce that no money is to be paid.

Then when the legal action comes, I am pretty sure that any sane judge will realise that a shareholder is not entitled to a return on their money if the company they own is insolvent, most of all from the taxpayer who at has had to pay a pretty penny for all of this and even gave the shareholders a small chance of a payout.

And if they do put the case before an insane judge, then the law has to be changed. If the bank of England intervenes to prop a bank up for the benefit of financial stability, i.e. not letting a run turn into a domino style collapse of the banking sector, that they can do so immune from any claim for compensation. Because if none of the above happens, next time a bank gets into trouble it will have to be allowed to fail, and that will be the time that we do get a general loss of confidence in the banks and a total financial collapse.

  • 58.
  • At 06:51 PM on 17 Feb 2008,
  • fuguez wrote:

Exactly - auction the mortgage book and fire everyone.

  • 59.
  • At 06:57 PM on 17 Feb 2008,
  • Graham wrote:

Re #1

The other banks don't currently have the funds - that the root of Northern Rock's problems and its little different now from when this crisis first started.

none of this would have been necessary but for Mervyn king's intansigence over "moral Hazzard". No bank in their right mind will want a loan from the BOE now given what happened to the rock when it asked. And remember it fault was in not arranging funding in advance of offering mortgages - it was and isn't broke, there's no reason to believe that the public purse will suffer a loss over this, and the whole problem was caused by a massive and unecessary loss of confidence caused primarily by Mr King.

  • 60.
  • At 06:57 PM on 17 Feb 2008,
  • Anthony Wilde wrote:

Remember those that complain about shareholder receiving nothing.

Next time the government wants to offload an asset - it will need those shareholders again - We will be demanding a premium to re-float.

Or did Tony really end clause 4?

  • 61.
  • At 06:58 PM on 17 Feb 2008,
  • JPF wrote:

"Why not sell off the mortgages to another bank at the market price, refund tax payers and savers their money in that order. Any left over refund share holders and then quickly close down the whole sorry mess. Lots of lessons to be learned!"

If the Gov can manage to do that without crashing the market price, you will find a lot of money is left-over, which definitely will lead to legal cases.

I have put a bet on this by taking on some NR shares:)

  • 62.
  • At 07:02 PM on 17 Feb 2008,
  • David wrote:

I was dreading this announcement, but it always had an air of inevitability.

"Why not sell off the mortgages to another bank at the market price, refund tax payers and savers their money in that order. Any left over refund share holders and then quickly close down the whole sorry mess. Lots of lessons to be learned!"

It's the sensible thing to do, but there are two reasons why not:

1) The political one - because that would mean the closure of Northern Rock, accompanied by inevitable job losses, not something the Government wants to have on its hands...

2) The financial one - because the market price of those mortgages has plummeted in the last 9 months, and may well at the moment be insufficient to cover the wind-up costs and savings deposits, let alone giving anything back to shareholders.

The Government clearly believes that the value of the mortgages will recover, but treasury analysts seem to have forgotten the efficient market hypothesis - the market should be perfectly valuing the mortgages based on available information. Does the Government have information that we do not, or is it really arrogant enough to belive that it can do a better job than the market at valuing these. By taking over The Rock, the Government is just digging a deeper hole for itself, while praying for a reversal in the fortunes of the housing market and economy in general.

  • 63.
  • At 07:03 PM on 17 Feb 2008,
  • Adrian P wrote:

For all those who have been lambasting Robert Peston since he began this vital blog last year and preposterously claiming he is a merchant of doom and gloom personally responsible for blocking NRock's 'road to recovery' NOW can you finally see that he was in fact putting the most anodyne, positive spin on what was in fact a cable-car plunging with all the cables cut?

NRock was a collapsing pyramid scheme long before Robert made a single comment about it. NRock was finished long before Lloyds TSB ran away shrieking from the Treasury in August 2007 when they were allowed to peep quickly at the torn front cover of the 'books' and realised merely from that that they were being offered an 'opportunity' to board the Titanic post-iceberg.

I have been an avid follower of Robert's enthralling and intelligent, and most of all sober analysis, but privately I have never believed NRock could be even remotely rescued (and now I wonder if the UK economy can be). If you want to know all about NRock's 'quality' mortgage book we all now own look no further than the superb and terrifying analysis of its spiv basket case collateral in the Telegraph:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/01/22/ccrock122.xml

Hopefully this year's Guys on bonfire night will be Adam Applegarth and New Labour!

  • 64.
  • At 07:08 PM on 17 Feb 2008,
  • pj kelly wrote:

Why did this come out on a Sunday? At 4pm? Peak inebriation/'out-of-it' time for the average(BBC showing live thrilling Boro v The Blades match) slumped-in-front-of-TV Brit? When the Kosovo UDI thing's making all the world headlines? When the pleb UK is entranced by some 'paedo' scoop out of Murdoch's News of the Screws? Good day to bury bad news? (ref. 9/11/2001)

Why didn't Robert Peston mention this? How odd.

Could it be, heaven forfend, that announcing this monday-friday, 9-5, would have crashed the footsie and/or pound? The government wouldn't be that cynical would they? Surely not. Governments don't do things like that.

  • 65.
  • At 07:09 PM on 17 Feb 2008,
  • Charles wrote:

Would you please explain if this means that I can now open, and put money, into a NEW NR savings account and be 100% secure AND get a higher return than I would get from a National Savings current account. If so, how can this be fair or right for those (suckers?) staying in National Savings accounts?

  • 66.
  • At 07:13 PM on 17 Feb 2008,
  • Graeme Hunt wrote:

Amazing how a multi-billion pound business can be sabotaged by one man - Robert Peston. Nah only kidding, I got free shares when NR floated and sold half a few years ago, on paper I've lost but I blame the former Chief Executive Adam Applegarth for this mess. He presided over the reckless business model (says a lot for the auditors mind)fueled by pure greed. I wonder if he feels sympathy for the poor NR workers whilst at home in his Northumberland mansion with his wife, Aston martin and Ferrari parked outside.

  • 67.
  • At 07:16 PM on 17 Feb 2008,
  • chal wrote:

Commiseration to Sir Richard Branson and the Virgin team.

  • 68.
  • At 07:20 PM on 17 Feb 2008,
  • Chris Kerridge wrote:

Why do you think all the offers of take over were so poor!? NR's assets are the UK's houses and Virgin etc. KNOW the housing market will correct itself in the very near future therefore making the assets worth a lot less. 5 years ago people would love to buy a bank with lots of mortgage debt, it was a no brainer - now however it's a dead loss.

Nationalisation is a very long term solution which will need at least 15 years to gain profit.

  • 69.
  • At 07:25 PM on 17 Feb 2008,
  • Anon wrote:

I bought some shares recently hoping to make a bit of money for myself, I see no harm in that and understood the risk. But please dont just assume everyone who owns shares in a company is a fat cat - some of us work hard for a living and were trying to make some extra money to improve ourselves.

So yes I wanted to make some money, but who doesnt? Its certainly not my, or any other small shareholders fault that NR messed up, and some of us looked at the situation and thought it could only improve.

I can only hope it might after a while ;)

  • 70.
  • At 07:43 PM on 17 Feb 2008,
  • Allan Bond wrote:

Greedy bankers who smelled fat profits.
Happy shareholders who collected the dividends.
Unlucky sub prime mortgagees who were sucked into buying what looked like a good deal and lost the the roof over their heads.
Hedge funds buying up the falling shares to make fat profits and threatening to sue the Government (Taxpayer) if they don't pay up.
Taxpayer collects the bill
This is the 'Rock' on which our democracy stands.


  • 71.
  • At 07:46 PM on 17 Feb 2008,
  • Joe Benjamin wrote:

Hedge funds not feeling quite so much in control!

All this about the business being solvent is absolute garbage without the guarantees and the government loans that business is bust. A missed opportunity to rebulid a dead brand with Virgin but i'm sure we have not heard the last of Branson and his team

  • 72.
  • At 07:49 PM on 17 Feb 2008,
  • Matt wrote:

As a member of staff in reply to the following entries: -

4) So now we are carrying the costs of running this 'bank' will we have the nerve to quickly downsize it ?(ie make the required redundancies)

Running the bank costs nothing. The income from the mortgage book more than covers the costs to run it - the problem is the funding to keep on lending and making the profits made previously. Plus, will 'we' have the nerve? Who are you exactly?

10) Some of the employees if they are any good will get jobs with other banks.

I will get another job don't worry, I'm very good. But, given the fact that there are no other banks based in this part of the country, and the fact there are are 6,000 of us - I feel that this is an ignorant post from someone who can't imagine the reality for someone in this position.

11) And its your fault, Robert Peston. If you hadn't blown this whole thing out of proportion we wouldn't have had a run on the bank, nor this whole furore about it all.

If the divine Mr Peston, egomaniac, hadn't chosen to do what he did, maybe we would still be in this position. But to see his gloating as he sees his own personal stock go up and up is galling beyond all recognition.

12) The only people I feel sorry for are the British taxpayers, against who the banking industry and govt have conspired a fraud of massive proportions for the last 10 years.

Thank you for your compassion. Of the 6,000 at risk (incidentally, all UK taxpayers), probably 50 had anything to do with designing the business model.

21) As a mortgagee with Northern Rock tied to a fixed rate deal surely now we would not be tied to them due to a technical change of ownership.
Does anyone know the answer to this?

You got what you wanted, it's no better or worse than when you signed up for it. The answer is don't be so stupid.

28) Why not sell off the mortgages to another bank at the market price, refund tax payers and savers their money in that order. Any left over refund share holders and then quickly close down the whole sorry mess. Lots of lessons to be learned!

Would love to be in the position when I could flippantly dismiss your own job, livelyhood and welfare of your family.

  • 73.
  • At 08:08 PM on 17 Feb 2008,
  • ordinary joe wrote:

TO MACKEM , ROBERT PESTON REPORTED ON THIS FIASCO WELL BEFORE ANYONE ELSE,IN FACT HE BROKE THE STORY,IF YOU WISH TO APPORTION BLAME OR HAVE A GREVIENCE,ON YOUR CURRENT PREDICIMENT THEN YOU SHOULD HAVE TAKEN THIS OUT ON THE BOARD,OR TAKEN HEED TO OUR ESTEEMED MR PESTONS REPORTS ON NR AND GOT OFF THE SINKING SHIP,I FEEL TRULEY SORRY FOR YOU AND YOUR COLLEAGUES,HOWEVER THIS IS THE BEST THING FOR US ORDINARY FOLK.

  • 74.
  • At 08:10 PM on 17 Feb 2008,
  • Tim, London wrote:

Nationalisation is not the worst option for the Rock. Thatcherism, whilst positive in some aspects was generally misguided. Labour was elected in 1997 with a mandate to merge old fashioned socialism with old fashioned conservatism.

This is not a step back; one needs just look at France, Germany and even the Republic of Ireland to see public sector companies thriving. Northern Rock should be re-privitised; however it may be 10-15 years before the government can completely dispose of its interest. It may even be wise for the UK government to keep 25% of the share capital post privitsation as the Irish government did on privatising aer lingus last year. Public sector companies can prosper as long as they are run along the lines of private sector companies. British Rail was a fantastically well run company in comparison to Rail Track. I work for Metronet (another private sector failure!) and can see clearly where the private sector can fail to live up to the Thatcherism ideal! There are some companies that will never make a profit in the private sector whilst there are some companies that will never make a profit in the public sector. One needs to balance the cost of a business versus it’s benefit to the wider economy. In this respect the cost of Northern Rock going into administration greatly outweighs the cost of it being Nationalised. Private sector means Directors are responsible, Public sector means Politian’s are responsible, what’s the difference?
did with aer lingus in 2007.

  • 75.
  • At 08:19 PM on 17 Feb 2008,
  • mike wrote:

The question I have is what exactly do the regulators like the FSA do? It seems like they regulate against the small issues (minor breaches of security and money laundering) but miss the big ones like BCCI, Equitable Life and Northern Rock. How the hell were they (NR) allowed to carry on trading with what everyone (now) says was a dodgy business model?

  • 76.
  • At 08:39 PM on 17 Feb 2008,
  • Michael wrote:

WHAT ABOUT THE STAFF?

Not a single person who doesn't work for Northern Rock has mentioned the staff. What will we do if we lose our jobs, who will pay our mortgages?, who will feed our children?

Can people please have a bit of consideration for the staff that have really worked hard over the past 6 months and are worried sick about what is going to happen!(the majority of us are shareholders and all of us taxpayers but our job is more important!)

  • 77.
  • At 08:42 PM on 17 Feb 2008,
  • jessica wrote:

Well done Matt, could not have put it better myself.

Its about time people gave us staff a mention and what we are going through!!!!

Terrible.

Out of the three options, nationalisation was the worst and now they've gone and done it. What is this really going to achieve?

And what's this about "temporary ownership". I could bet on it that we don't get to see a private sale for at least a few years by which time everyone will have moved on.

I think that this just proves what has become of our government. Damn you Alistair Darling!

  • 79.
  • At 08:51 PM on 17 Feb 2008,
  • For the Staff .... wrote:

Everybody seems to stick thier nose in at some point, many not even understanding what is going on.
The staff who by the way are all taxpayers, most are shareholders and all have families to support have had no aid or even a thought. We have been through hell and alot of stress over the past 5 months, this especially applies to branch staff who have had to face the public abuse because of other peoples mistakes. The media coverage of this hasnt exactly been helpful to the cause but what did you expect. (Peston views especially....)
Thanks Very much.

  • 80.
  • At 08:51 PM on 17 Feb 2008,
  • stanilic wrote:

How much have Messrs. Goldman Sachs made in consultancy fees throughout this entire fiasco which anyone with a brain knew would end in nationalisation?

I knew it, Vince Cable knew it as did a whole load of others.

My question is how come Goldman Sachs, who tell us they were skilled enough to be forewarned as to the entire sub-prime debacle, did not know it as well?

  • 81.
  • At 09:06 PM on 17 Feb 2008,
  • Ian Harris wrote:

Nationalisation may well be the best result for everyone apart from the shareholders.

1. Staff will see a business remain larger and employing more staff for much longer than any of the private buyers would have envisaged. 23 local labour MP's will see to that.

2. For borrowers don't expect any massive hikes in rates or charges for the same reasons detailed in 1 above.

3. Mortgages are long term products. There will need to be many people to process and administer them for many years to come.

Don't blame Robert Peston for this, he was only the messanger. The blame lies with Adam Applegarth and the old board and no one else.

  • 82.
  • At 09:15 PM on 17 Feb 2008,
  • Richard Taylor wrote:

So who is to blame here, for a supposedly sound company to be now rescued by the Government in the form of Nationalisation ( for those born after 1977 it means the Government now controls this business)?
Well let's start with you Robert Peston.
As a journalist I feel you have fallen short of intelligent reporting your comments have erred more towards the gossip columns.
Other Banks. You guys are typical of the quote from a Rockefellar, I forget which, who said "A Bank will lend you an umbrella when the sun is shining and ask for it back as soon as rain appears". I think all bankers acted selfishly and forgot they were part of an important sector.
Can anyone remember when we all looked up to our Bank Manager, I can just, nowadays they just try and sell you insurance.
So between the Banks themselves and the gossip orientated media the Rock has been nationalised.
The Government, who I am not overly fond of (Iraq, Education and sleaze) I feel have done the responsible thing here.
Their stance, I feel is pretty sensible, in the absence of any cool heads (Mr Branson accepted, but he would have made a lot of money ) have said we will look after the situation until you bankers calm down and Mr Peston finds some other story to gossip about.
Shareholders, if you have been there since the beginning, you should have acted sooner.
Speculators, tough luck there is always the next one.

  • 83.
  • At 09:18 PM on 17 Feb 2008,
  • Jim wrote:

As soon as it became known that the Rock was on it`s last leg , everybody should have taken their money out .

( When the Government becomes involved , the situation is screwed .)

  • 84.
  • At 09:46 PM on 17 Feb 2008,
  • Guy Thornton wrote:

Now that Darling's got his mitts on NR they ought to close all deposit accounts tomorrow and give people their cash back. That will simplify running the bank. From tomorrow they can also stop taking on new business. By the end of the week they can let go 99% of the staff and make a start on selling or letting all their premises. Meanwhile sell off as many mortgages as possible to other banks at market rates and offer uncompetitive rates as fixed deals come to end of term thereby driving customers to other banks. Wind-up the whole shebang quickly, firmly, with no panic and get us taxpaying mugs out of a hole we should not be in.

  • 85.
  • At 10:13 PM on 17 Feb 2008,
  • David Simmons wrote:

Suddenly, sticking money under the mattress has the air of a sound investment decision...

  • 86.
  • At 10:59 PM on 17 Feb 2008,
  • Diversity wrote:

Back last summer, Alastair Darling (Gordon Brown?) turned down the offer of a quiet takeover of Nortehrn Rock by Lloyds TSB. Since then the government has dithered and hoped for something to turn up. I don't see how you can write much "intelligent jounalism" about evident and hopeless dither which has only one plausible end coming.
As for Northern Rock staff, Those who look after the existing mortgage book look to be OK. Those in the rest of the bank will have to take their chances. There are other banks, etc., still hiring.
For the ordinary shareholders, it is tough; though not as bad as seeing a pension disappear.
For the hedge funds who understandably bet on this government's wooly weakness, it is nice to see them lose. Tory dithering enriched a lot of speculators on Black Wednesday in the 1990s; the tribe needed a lesson that walking away with the UK Treasury's money is not possible on every occasion.

  • 87.
  • At 11:07 PM on 17 Feb 2008,
  • Mack wrote:

Maybe as Northen Rock's staff are now all public sector employees we will get the same pension benefits as other public sector workers?

No didn't think so either.

  • 88.
  • At 11:25 PM on 17 Feb 2008,
  • Kris wrote:

As said by Jessica and Matt , I am too a member of staff along with my partner, I also have a mortgage with the Rock AND I`m a tax payer AND a shareholder !! You people want to remember in the SOUTH of the country this situation affects a hell of alot of people in the NE !! We have worked very hard over the last 5 months running this company to the best of our ability !!

  • 89.
  • At 11:35 PM on 17 Feb 2008,
  • K Buckmaster wrote:

The blame Robert Peston posts are positively comic!

I think you should look more toward the direction of the board, who are even managing to milk the collapse for special retention bonuses. Then look perhaps, if you had shares, to yourself, for keeping them - shares are always a gamble (unless again, you're on the board and in the know...).

  • 90.
  • At 11:52 PM on 17 Feb 2008,
  • Adrian P wrote:

Whilst I unreservedly hope that there are no job losses I am slightly disconcerted by the chutzpah of some of the above posters claiming to be NRock 'members of staff'.

Some appear to demand that other bloggers remember THEIR livelihoods, THEIR families and THEIR mortgages in this crisis (and then typically seem to blame Robert Peston for their new insecurity).

Well my similar message to them might be "where is your shame, your humility?"

Because what about the thousands of people who were mis-sold mortgages by NRock? (in deals which might eventually turn out to have bordered on the criminal)... hopeless cases who may soon face being repossessed?

And what about the appalling break-up of council estates achieved by NRock above all others having irresponsibly promoted the right-to-buy to the vulnerable in the last ten years. These were the very people who were often then dispossessed by scavenging offshore property companies? And the decline of social housing and social cohesion that resulted?

And what about the first-time buyers priced out of a home over the last five years thanks to the wave of new buy-to-let landlords NRock helped to deluge the country with?

NRock’s salesmen were discredited in a Panorama programme on the scandal of self-certificating mortgages back in 2004 yet NRock staff accelerated their efforts to foist credit cards and buy-to-let mortgages on those least able to afford them.

Rotten-Applegarth set targets which (if god forbid the property market does crash) may ultimately be revealed to have been illegal but the staff nevertheless 'worked hard' to meet them.

It is, in my opinion, selfish denial to now maintain that NRock has collapsed due to Robert Peston's blog.

It collapsed, and was unrescuable, mainly because of NRock staff's very 'success' at meeting Rotten Adam's dodgy targets.

Just as I felt sorry for Enron's former staff (well some of them) but felt a lot sorrier for the millions of Californians who were blacked-out by the power-cuts they speculated to create, likewise I'm afraid with my sympathies for NRock's staff now.

I blame the NRock management and New Labour's love affair with rich 'fraudsters' and international tax-evaders for manufacturing a culture which came to tolerate a gargantuan pyramid scam like NRock ...

I certainly don't blame Robert Peston and his bloggers ... gawd help us!

  • 91.
  • At 12:55 AM on 18 Feb 2008,
  • Andrew Knight wrote:

What day to day running has Northern Rock got to do? It needs to run down it's mortgage books by trying to persuade borrowers to renew deals with its rivals so that its savers deposits to mortgage borrowing ratio is brought to a sustainable level. The idea of underwriting new business with taxpayers money being unthinkable. It's savings accounts can be bettered by rivals as well. Since the Rock was seen as a favourable lender of 100%+ loan to value interest only mortgages consumers are going to be hurt by the fact they can't fund purchases of homes as other banks won't take on the risk. Most now want at worst full capital monthly repayments plus a 10% deposit plus hefty signing on fee. This will only further dampen the housing market.

  • 92.
  • At 08:05 AM on 18 Feb 2008,
  • TheMauritania wrote:

What I don't understand, is the statement 'embarrassment for the governemnt!'
The governemnet are looking after our supposed investment - the taxpayer - and as such if this is the best way forward how is it embarrassing???
Also NB shareholders: as it says on the BBC explaination of the NB crisis and what nationalisation is: "Northern Rock got itself into financial difficulties last year because its business model left it ill-prepared for the global credit crunch." Thus, the shares were overvalued as they were based on a lie essentially, a model that was not robust eneough to cope when the times got tough...So you takes the rough with the smooth!
I have no problem with the government taking this on, with a hand picked management team of people who have been there, done that, got the t-shirt etc...Who will guide it through and hopefully, unlike past deals (and may be this is where the problems of embarrasment occur)...Sell it for what it is worth plus a premium, instead of on the cheap!!!
I may be naive here, and naybody who can explain properly why it is 'embarrassing,' then pray tell...

  • 93.
  • At 09:18 AM on 18 Feb 2008,
  • ian white wrote:

I THINK ALL THE BANKS SHOULD BE NATIONALISED. IT IS OBVIOUS WE CANNOT TRUST THESE PEOPLE WITH OUR MONEY OR THE GOVERNMENTS MONEY. THEY CAN GAMBLE AWAY THE EQUIVALENT OF A COUNTRY'S BUDGET WITHOUT ANY TRACE OF CONSCIENCE.THIS IS NOT ACCEPTABLE.

  • 94.
  • At 11:57 AM on 18 Feb 2008,
  • Anthony Hinds wrote:

I don't concur that rates must go up to shrink the business and the book. why not use the new found security to build the business and make other banks truly compete rather than be cosy in their cartel. If private businesses are so efficient this shouldn't be a problem should it? Northern Rock was the lowest cost mortgage provider in the market before the problems.

When the business is very strong and vibrant, it can be re-privatised and the government can make a significant windfall selling it off again. In the meantime the profitable business that was the Northern Rock can contribute its profits to the public purse.

  • 95.
  • At 12:30 PM on 18 Feb 2008,
  • MA wrote:

Couple of points, just the obvious really:

1. Staff: Job losses - What do you expect? Have a look at what your directors and senior managers are doing, relocating into 'bunker' departments as part of staff reorganisations, right?

If you think labour won't cut jobs, dream on. The taxpayer is breathing down their necks, and voting labour is a religion in the north east, not a logical choice. They won't be concerned about losing this mindless labour heartland vote.

2. Shareholders: A lot of money has been going into NR since 14/9, a good deal of it from small punters. Why do you think the shares have been so reactive. Do we really need pay out of the public purse for this equivalent of big boys scratch cards? Anyone long term investors that stayed out of 'loyalty': Mugs. This isn't a football team. The large investors have been increasing their holding, gearing up for some euro court battle. There is no moral high ground here.

3. Mortgage holders: The bank has made you a loan, the risk lies with them. Your problem would come if all products went to SVR on maturity (i.e. when your fixed term is up).

They could do this to drive you to another lender and realise short term cash injection. The trouble would be if you could not port to another lender (i.e. Halifax, Abbey etc would not have you). This probably only be the case if you were a poor credit rating and/or have poor equity (i.e. stupidly borrowed at 95%+ of the property value). Unfortunately Darwin's Law still applies in our nanny state, but fortunately this is unlikely (fingers crossed, chaps).

4. GB Ltd: Now the government has taken on NR you may find that the arrears book has been s-l-i-g-h-t-l-y optimistic in recent years. It would be interesting to know, definitively, what the collective LTV is on NRs book. Not that we ever shall...

  • 96.
  • At 12:53 PM on 18 Feb 2008,
  • Martin S wrote:

There is a lot of hot air and twaddle being put out by a lot of people who haven't a clue about any of this situation. It's clear they are just lashing out wth their comments because it suits their particular hobby horse. People should actually be aware of the facts before spouting off with their sneering jibes at shareholders, the Chancellor etc.

The facts are that Northern Rock did nothing illegal, the FSA had no concerns nor did the Bank of England. It had a very successful business model which made good profits and allowed an awful lot of people mortgages on their properties. It then had the misfortune to fall foul of a temporary blip in America.

The particular problem that now exists was because of irresponsible reporting by Robert Preston who in my opinion caused a run on the bank and a collapse in confidence. He came onto our tv screens and smirked at the time he made his announcements over 3 nights.

This was aided and abetted by a lack of support by the Bank of England at the time because it failed to lend money to the makets at the rigrt time which incidentally was done by the American and European authorities.

The Northern Rock is still a going concern and it is still profitable. It still has assets which exceed its liabilities and when the current temporary crisis is over which it will be because its cyclical and will pass the taxpayer will have lost nothing. The reason the Chancelor gave the loans to Northern Rock were to protect the whole British Banking System as it could have conceivably imploded if he hadn't. He was right to do so and history will judge him to have been bold, courageous and right.

If this had happened in America in my opinion a class action would have been taken out against the BBC and the Bank of England and shareholders would have claimed back the whole of the value of their shares just prior to the announcements made on tv.

To Adrian, post 90, what a load of nonsense.
You say thousands of mortgages were 'mis-sold' by NR staff - where on earth has that comment come from!!?? Certainly not based on fact. The Panorama programme you refer to was about mortgage intermediaries, not NR staff.
And how irresponsible of NR to allow people to buy their council houses, at huge discounts, now having considerable assets. How irresponsible indeed.
This lender has helped more first time buyers than any other over the last 10 years, and helped keep the housing market going. Everybody who's looking at their inflated house values should remember the role NR helped play in that.

  • 98.
  • At 05:38 PM on 18 Feb 2008,
  • Stuart W wrote:

I am trying to understand why the government has had to lend Northern Rock so much since August of last year. Since the time of the problems, I imagine that there has been no appetite for anyone borrowing any money from the Rock as their deals they have offered have been way off the competitive market place.

So this must mean that they have not had to securitise that much lending in the last few months. This being said there must have been a lot of loans and mortgages they had to honour in the interim.

So, surely now there must be thousands of Northern Rock customers that are coming to the end of mortgage deals and switching away from them. If there are virtually no new mortgages being granted, then the influx of monies into the Rock must allow them to sort this out themselves.

Also, we should remember that people are still paying their loans and mortgages each month which is also giving the company millions each month.

I would have though that if they closed their branches to new business for 2 years, they would have sorted it out themselves and then been able to trade again but with a better business plan.

I may be missing something here but maybe someone can shed some light on this, if this is the case.

  • 99.
  • At 06:43 PM on 18 Feb 2008,
  • H.Jay wrote:

The facts are that this nationalisation is neither like those of post WW2 which were due to politics, and also not like those of British Leyland with indutrial - technical factors involved. The solution to this problem of NR can only be found through the reverting to the archaic pre-IT type of accountancy and bookkeeping principles mode of thinking.

  • 100.
  • At 08:07 PM on 18 Feb 2008,
  • Leet wrote:

To # 98
You are not far off on your interpretation.

NR owe about 23.5 billion. The VAST majority of this is due to money going out of the door in the run which Mr Peston anticipated & reported so very well.

If the BoE had done what the ECB did for several banks in Germany and Spain and this had not been splashed in the press, then this wouldn't have happened.

Lending has almost stopped and the book is being run down to repay the govnt asap

  • 101.
  • At 08:32 PM on 18 Feb 2008,
  • anon wrote:

post 90
FSA regulates all banks and there are two levels of service Advised where customers sign to say they agree to the terms of the mortgage and accept the product is best for them, then there is non advised where the customer is offered all products in the range by asking a number of questions to the customer.

How can this be misselling when a the cusotmer either agrees to the product as it best suits their needs or b the customer has chosen their own product

Get a grip thats not misseling !

  • 102.
  • At 10:42 AM on 19 Feb 2008,
  • MA wrote:

Re #97

Sorry, anon. Hope you don't work for NR or any other mortgage vendor, as you don't seem to know how indirect mortgaging works.

Intermediaries get a fee from the mortgage *vendor* (i.e. NR) for referring the buyer and taking them through the *vendor's* questionnaire (Money for old rope, you might think, especially as the intermediary can also charge the buyer a percentage of the loan, but this is about blame, not value for money).

But the Decision (In Principal, or at Offer stage) is the vendors (that would be NR, remember?). They conduct the property valuation and checks; their own underwriter staff do all the background checks, credit rating etc. It is the underwriters' responsability to ensure the mortgage application meets the requirements of the vendors. The idea NR would accept a mortgage on an intermediary's say so is laughable.

Also, it is the vendor (i.e. NR) who creates the products (mortgage schemes) in the first place. And it is the vendor (i.e. NR) who decides to give the loan.

For example, the idea to allow any number of buy to let loans for a buyer with *no prooof of income required* was an NoRthern Rock policy decision (Hmm, let's think about that ... anyone on job seekers allowance could get a mortgage on a bunch properties, so long as the rental income covered the mortgage repayment - oh, and overall exposure was under £1 million!). Check the product sheets if you don't believe me. Does that sound like prudence or reckless greed to corner the BTL market!?

125% mortgages, allowing interest only repayments on the customer's say so they had a repayment scheme in place, etc, etc. You can't blame the brokers for selling the stuff is people would buy and the vendor would sell.

This not only set NR up for a fall but has underlied the runaway house price inflation. Other mortgage vendors have been driven by wildfire success of the NR model, just to compete.

Blame NR, or the FSA for sitting on their thumbs, or Gordon Brown as cheerleader for this when it suited him, but you can't blame the intermediaries. They are simple mercenaries, they did not start the war or make the suicidal strategy.

If you think this is being wise after the fact, a lot of people were wise before the fact, they just were not on the NR board or in the Exchequer. And even hinting something like the above in NR pre 14/7 was what is known as a 'career limiting decision'.

  • 103.
  • At 08:17 PM on 20 Feb 2008,
  • Graeme Hunt wrote:

I've heard that the shareholders plan to sue, is it possible that the Govt could sweeten them up by agreeing to give them preference in applying for new shares once NR is floated again?

Also, if the Nationalisation is 'temporary' then why give the shareholders any compensention,could it not be the case that they become all singing and dancing shareholders again once NR is floated?

Robert Peston doesn't seem to answer any questions placed on these pages so if knowledgeable people out there know?

Just to be upfront I have 250 shares but got them for free when NR demutualised so i don't ask or deserve any sympathy. Nationalisation was probably the best thing (but don't expect a small tax rebate when the Govt makes a lot of money out of this) My main thoughts are with the workers of NR, good luck to them all.

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