Northern Rock makes hefty losses

#1
Northern Rock has reported a loss of £724.2m for the first six months of 2009, compared with a loss of £585.4m in the first half of last year.

The nationalised bank said that 3.92% of its mortgage loans were more than three months in arrears, well above the national average of 2.39%.

It currently owes the government £10.9bn, but is waiting for European regulatory clearance for more funding.

Northern Rock was nationalised in February 2008.

It had to be bailed out by taxpayers in 2007, when its model of borrowing short-term funds from wholesale markets to lend to mortgage borrowers was hit by the credit crunch.
http://news.bbc.co.uk/1/hi/business/8182751.stm

Deep deep joy. :roll:
 
#4
Actually, Northern Rock didn't make a penny loss…

We the taxpayers did. :evil:
 
#5
quelle surprise, they were so over exposed to asset to risk ratio that it was a given on day one.

All hail Gordo; the sort of financial genius that cant even buy proper magic beans....
 
#7
Absolutely no suprise whatsoever. Brown had a quick panic, knee-jerk political reaction without any real due-dillegence or economic consideration as to what they were really buying into. There were no private sector buyers at the fantasy levels Labour wanted to offload NR for because they had a much better understanding of the risks involved. Once again the question has to be how on earth did this myth of Browns economic genius arise? He is an amatuer and once again the banking sector have played him for the fool he is. And yes, now the buyers will squeeze an even lower price for NR because the government is a very distressed seller that needs to offload it before the losses rack up further. It was a crap business that should have gone into recievership, not public ownership.
 
#8
Good thing about the Eton/Harrow boys is at least they can make money - the current lot can only know how to spend it!
 
#9
Which is of course the main point in favour of allowing MPs to have other jobs in the real world rather than being career politicians
 
#10
Obviously there a people in genuine dire straits who can't pay their mortgages.

But what should have been forseen is that a lot of people pay their mortgages because they have to, that is: Dont pay and you lose your home, take away the santions that lenders can apply to defaulting payers and a whole load of people will not put themselves out to pay.
 
#11
Why so surprised the Broon bailed out Northern Rock?

After all, NR used the same business model that Broon has used for the last 10 years, borrow money to give to people who can't afford things so they can buy things they can't afford.

NR borrowed money to lend to knobbbers who couldn't get mortgages from real banks and building societies becuase they were piss poor and had little chance of paying it back…

Broon calls his system Tax Credits.
 
#12
Tawahi-50 said:
Obviously there a people in genuine dire straits who can't pay their mortgages.

But what should have been forseen is that a lot of people pay their mortgages because they have to, that is: Dont pay and you lose your home, take away the santions that lenders can apply to defaulting payers and a whole load of people will not put themselves out to pay.
I think you misunderstand. If Northern Rock had gone bust and into receivership then its not the case that people woudnt have had to pay their morgages. The parts of the bank would have been sold to the best bidder likely via auction to other institutions based on what they were prepared to pay to take over those morgages for example. The homeowners would simply owe money to another bank, likely at the same terms until the terms needed adjusting. Not good for the shareholders but they didnt do so well anyway and they should have known better to own a slice of that company.
However instead Labour effectively took on all the liabilities and assets without really any idea what they were taking on and wrote a blank cheque as the cost of being able to say "we saved the banks". Anybody can save any bank or business if you throw enough money at it and are prepared to accept any loss. But making a business profitable is another matter entirely and the messiah picked a particularly shitty one. Northern Rock wasnt in temporary trouble that a quick lick of paint and a new shopfront was going to cure. It was showing signs of being a potential basketcase with a very risky and flawed business model that failed at the first sign of trouble. We would all be in a better place if they had failed. Unemployment is not going away anytime soon and more ARMs will come bad soon so I expect more losses before NR stands any chance of posting anything close good numbers (unless Labour puts its best spinners on the case...).
 
#13
jockass said:
Tawahi-50 said:
Obviously there a people in genuine dire straits who can't pay their mortgages.

But what should have been forseen is that a lot of people pay their mortgages because they have to, that is: Dont pay and you lose your home, take away the santions that lenders can apply to defaulting payers and a whole load of people will not put themselves out to pay.
I think you misunderstand. If Northern Rock had gone bust and into receivership then its not the case that people woudnt have had to pay their morgages. The parts of the bank would have been sold to the best bidder likely via auction to other institutions based on what they were prepared to pay to take over those morgages for example. The homeowners would simply owe money to another bank, likely at the same terms until the terms needed adjusting. Not good for the shareholders but they didnt do so well anyway and they should have known better to own a slice of that company.
However instead Labour effectively took on all the liabilities and assets without really any idea what they were taking on and wrote a blank cheque as the cost of being able to say "we saved the banks". Anybody can save any bank or business if you throw enough money at it and are prepared to accept any loss. But making a business profitable is another matter entirely and the messiah picked a particularly shitty one. Northern Rock wasnt in temporary trouble that a quick lick of paint and a new shopfront was going to cure. It was showing signs of being a potential basketcase with a very risky and flawed business model that failed at the first sign of trouble. We would all be in a better place if they had failed. Unemployment is not going away anytime soon and more ARMs will come bad soon so I expect more losses before NR stands any chance of posting anything close good numbers (unless Labour puts its best spinners on the case...).
Yes, clearly I was in error in thinking that
The nationalised bank said that 3.92% of its mortgage loans were more than three months in arrears, well above the national average of 2.39%.
referred to mortgage loans and more people failing to pay the instalments
 
#14
Perhaps the whole Northern Rock bail out would be better explained by looking at who had money invested in it.
And then take a close look at those same Northern Rock investors and see who co-incedentally also happen to finance the Labour Party.
The draw your own conclusions about what the financial outcome would have been for Labour Party coffers had Northern Rock gone down the pan.
Allegedly, of course. I'm sure that non of the Unions or financial supporters of the Labour Party stood to loose a single penny from the demise of Northern Rock.
 
#15
Undoubtedly Gordon Brown has done a marvellous job of bulldozering vast, collosal piles of our money into assorted bottomless pits never to be see again and clearly the "current period of economic uncertainty" has taken everyone completely by surprise and could never have been foreseen!

However... if that's the case I would like to know what the hell Gordon Brown (as Chancellor of the Exchequer) and his little Treasury chums were doing for the past 10 - 12 years? I have raised this point before (only half joking) in other threads!
 
#16
Northern Rock charged me £25 for the pleasure of moving my house insurance to another company...robbing tw*ts!
 
#17
Tawahi-50 said:
jockass said:
Tawahi-50 said:
Obviously there a people in genuine dire straits who can't pay their mortgages.

But what should have been forseen is that a lot of people pay their mortgages because they have to, that is: Dont pay and you lose your home, take away the santions that lenders can apply to defaulting payers and a whole load of people will not put themselves out to pay.
I think you misunderstand. If Northern Rock had gone bust and into receivership then its not the case that people woudnt have had to pay their morgages. The parts of the bank would have been sold to the best bidder likely via auction to other institutions based on what they were prepared to pay to take over those morgages for example. The homeowners would simply owe money to another bank, likely at the same terms until the terms needed adjusting. Not good for the shareholders but they didnt do so well anyway and they should have known better to own a slice of that company.
However instead Labour effectively took on all the liabilities and assets without really any idea what they were taking on and wrote a blank cheque as the cost of being able to say "we saved the banks". Anybody can save any bank or business if you throw enough money at it and are prepared to accept any loss. But making a business profitable is another matter entirely and the messiah picked a particularly shitty one. Northern Rock wasnt in temporary trouble that a quick lick of paint and a new shopfront was going to cure. It was showing signs of being a potential basketcase with a very risky and flawed business model that failed at the first sign of trouble. We would all be in a better place if they had failed. Unemployment is not going away anytime soon and more ARMs will come bad soon so I expect more losses before NR stands any chance of posting anything close good numbers (unless Labour puts its best spinners on the case...).
Yes, clearly I was in error in thinking that
The nationalised bank said that 3.92% of its mortgage loans were more than three months in arrears, well above the national average of 2.39%.
referred to mortgage loans and more people failing to pay the instalments
Northern Rock had an aggressive policy of expansion that allowed their lenders to give money and morgages to people who under traditional terms of assessment sane and responsible lenders wouldnt have touched with a bargepole. Thats why their business model was risky, and was the first to fail at the first sign of the housing bubble bursting and the economy faltering.

Now after 2 more years of economic downturn its no suprise that a business model that faltered in 2007 is haemoraging money in 2009. They cherry picked the risky customers with 110% morgages and the government was politically motivated rather than economically motivated when it decided that the bank was worth saving rather than letting the bankrupcy preceedings salvage what could be salvaged and write off the losses to shareholders that which couldnt.

But the vast majority of the UK made a conscious or unconsious decision NOT to be a shareholder in Northern Rock and yet thanks to Brown have had ownership of a sh1t sandwich thrust upon them. I do remember at the time they tried to spin it that on the basis of similar Scandinavian nationalisations then this would actually end up making money for the taxpayer. Wrong!
 
#18
jockass said:
Tawahi-50 said:
Obviously there a people in genuine dire straits who can't pay their mortgages.

But what should have been forseen is that a lot of people pay their mortgages because they have to, that is: Dont pay and you lose your home, take away the santions that lenders can apply to defaulting payers and a whole load of people will not put themselves out to pay.
I think you misunderstand. If Northern Rock had gone bust and into receivership then its not the case that people woudnt have had to pay their morgages. The parts of the bank would have been sold to the best bidder likely via auction to other institutions based on what they were prepared to pay to take over those morgages for example. The homeowners would simply owe money to another bank, likely at the same terms until the terms needed adjusting. Not good for the shareholders but they didnt do so well anyway and they should have known better to own a slice of that company.
However instead Labour effectively took on all the liabilities and assets without really any idea what they were taking on and wrote a blank cheque as the cost of being able to say "we saved the banks". Anybody can save any bank or business if you throw enough money at it and are prepared to accept any loss. But making a business profitable is another matter entirely and the messiah picked a particularly shitty one. Northern Rock wasnt in temporary trouble that a quick lick of paint and a new shopfront was going to cure. It was showing signs of being a potential basketcase with a very risky and flawed business model that failed at the first sign of trouble. We would all be in a better place if they had failed. Unemployment is not going away anytime soon and more ARMs will come bad soon so I expect more losses before NR stands any chance of posting anything close good numbers (unless Labour puts its best spinners on the case...).
Spot on; it should have been allowed to go bust. The problem was that its headquarters are in a Labour controlled region.

Litotes
 
#19
Mr_Deputy said:
Archangel said:
However... if that's the case I would like to know what the hell Gordon Brown (as Chancellor of the Exchequer) and his little Treasury chums were doing for the past 10 - 12 years? I have raised this point before (only half joking) in other threads!
Following Tory economic policy until they went to the filing cabinet one morning and there were no more bits of paper in there and they ran out of ideas. Cue lots of screaming and bitter words.
Is that the filing cabinet containing the now completely bald golden goose???

Litotes
 
#20
CF wrote:

'It's well known that good ol' Gordon Brown is keen to sell Northern Rock - there have been talks with Tesco - just as soon as he can.'

So let me get this straight - having nearly brought Lloyds Bank down by offloading RBS onto it, Brown is trying to bring Tesco down by dumping Northern Rock on it. Whatever else you may think of Tesco, they are not run by idiots and if they buy Northern Rock, they will want a massive sweetener to do it. Cue massive debt write-offs in order to 'secure maximum value for the taxpayer'.
 

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