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Northern Crock Lose Another £725 Million

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so 4% of its loans are more than 3 months in arrears, with the recession just kicked off, and still only lost 725 million.

they are making money somehow....guess their new lending is attracting high fees and interest.

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Guest UK Debt Slave
The crappy savings rates must be helping them.

Gotta pay those bank bonuses somehow. Looting the sheeple is the name of the game now. It's so brazen and all encompassing, you just wonder when the fekk people are going to wake up

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so 4% of its loans are more than 3 months in arrears, with the recession just kicked off, and still only lost 725 million.

they are making money somehow....guess their new lending is attracting high fees and interest.

Just imagine what the defaults would be like if IR were in "normal" range.

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I can't find any info on this yet, but Simon on BBC Breakfast this morning said that NR was going to be split in two. The profitable money making part sold back to the private sector in six months time, while the government, us the tax payer, left with the toxic loan crud.

Not fucking happy!!! :angry:

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From the Guardian:

The government wants to split Northern Rock into two separate entities: BankCo, which will do new lending, and AssetCo, which will hold the troubled loan book. The plan requires EU approval.

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Just imagine what the defaults would be like if IR were in "normal" range.

indeed, and 4% means they are seriously in the dodo. sorry, the taxpayer is seriously in the dodo.

bigger bonuses required.

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Listening to radio2 Northern rock was the news lead story, comments by Peston telling us that its not as bad as it looks and that things could be getting better..............so no need to be too worried, oh thank goodness for that

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3.92% arrears rate is huge.

Things looked so different just two years ago:

Independent, April 2007:

Northern Rock yesterday predicted surging business as people seek to reduce the burden of high interest payments by using mortgages to refinance their debt.

An upbeat Adam Applegarth, chief executive, also dismissed fears of a housing market crash, saying that prices should rise in line with average earnings - between 4 and 6 per cent - outside London.

Mr Applegarth added: "Five years ago, the housing market was 90 per cent of the mortgage market, but that is not so any more. We are now 50-50 between people buying new houses and people remortgaging, using their mortgage to refinance debt and cut the interest bills from credit cards for example. Against that background, it is quite logical to see strong mortgage figures."

Backing his statements were figures showing total net lending was 34 per cent higher in the first quarter of 2007 than in the same period last year. Northern Rock has consistently lent above its natural market share of Britain's mortgage stock in recent years, and the company said its total lending pipeline going into the second quarter was £6.7bn, up 16 per cent.

The bank further reassured on arrears, saying its figure of 0.89 per cent was running at half the industry average. It added: "We continue to see no deterioration in our forward looking behavioural credit scores, which gives advance warning of early arrears."

Mr Applegarth pointed out that while interest rates have been rising - with economists speculating that rates will have to rise by another quarter point in the next two months - they remain "low by historic standards". He added: "Arrears are driven by unemployment, because if you have a job, you pay your mortgage. Yes, unemployment is gently going up, but employment is also rising.

James Eden, a Dresdner Kleinwort analyst, said: "Northern Rock [is] still firing on all cylinders - still our top pick in England."

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I can't find any info on this yet, but Simon on BBC Breakfast this morning said that NR was going to be split in two. The profitable money making part sold back to the private sector in six months time, while the government, us the tax payer, left with the toxic loan crud.

Northern Rock is hoping to increase lending by splitting itself into two businesses. A new “Bankco†will hold deposits, carry out new lending and house some of its existing mortgages.

The “Assetcoâ€, or the "bad bank" will hold the rest of the mortgages and will be responsible for repaying the £10.9 billion of outstanding government loans.

Gary Hoffman, chief executive of Northern Rock, said the bank was hopeful the restructure of the business would pave the way for it to be sold back into the private sector.

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My thoughts on this - would appreciate sensible comments because some of the numbers are bizarre.

39% of loans arer now in negative equity compared to a Fitch June estimate of just 15% for the UK as a whole. That number jumped from 33% at December despite the LTV of the overall book only increasing from 74% from 73%, against a backdrop of a small rise in house prices, which presents a bit of a puzzle.

The rate of asset quality deterioration does appear to be slowing, with arrears only increasing 0.25% since March, compared with a 0.75% jump from December to March, while properties held in possession fell by nearly 33%. This seems in line with comments from Baclays CEO John Varley who noted "signs that the rate of deterioration is slowing".

One snapshot that I did find bizarre was that arrears in the Together product were higher on the secured portions of the loans, at 6.47% than they were on the unsecured lending (5.46%), which seems to fly in the face of the conventional logic that you keep paying your mortgage long after you've given up on the credit card. Ex-Together-product arrears in the unsecured lending book were just under the 3% level, but important to note that without mediation of loan balances this would be at 7.70%, still far better than many commentators are expecting over the cycle. With house prices appearing to have largely stabilised, unsecured lending arrears look like the most important number to watch for the potential next leg down.

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Also interesting, and a potential blow to the recovereh, is the planned cutback in new lending. Back in February they had promised the government to lend an extra £5billion this year in mortgages, but are now saying they will only manage £4billion. £5billion in extra lending would be enough for over 44,000 average sized mortgages - more than the average monthly lending from all lenders combined last year.

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Even a year ago an arrears rate of just 0.95% was seen as worrying:

May 2008:

The mortgage lender Northern Rock, which was nationalised earlier this year, revealed yesterday that the number of customers falling behind with monthly loan repayments almost doubled in the past three months.

Arrears, which the lender previously had boasted were below the industry average, climbed from 0.57% to 0.95%, raising fears that the quality of its loan book was deteriorating rapidly.

The figures were expected to cause concern in the Treasury about the stability of the bank.

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Northern Rock is hoping to increase lending by splitting itself into two businesses. A new “Bankco†will hold deposits, carry out new lending and house some of its existing mortgages.

The “Assetcoâ€, or the "bad bank" will hold the rest of the mortgages and will be responsible for repaying the £10.9 billion of outstanding government loans.

Gary Hoffman, chief executive of Northern Rock, said the bank was hopeful the restructure of the business would pave the way for it to be sold back into the private sector.

Pure trickery. Why bother we do not need another BS..just put into run off.

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I can't find any info on this yet, but Simon on BBC Breakfast this morning said that NR was going to be split in two. The profitable money making part sold back to the private sector in six months time, while the government, us the tax payer, left with the toxic loan crud.

Not fucking happy!!! :angry:

A few 'mentalists' on here bought into NR when they were nose diving, banking on:

1. a rebound

2. Government comp

and they've sh!t out :lol:

Edited by Rover

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Northern Rock is hoping to increase lending by splitting itself into two businesses. A new “Bankco†will hold deposits, carry out new lending and house some of its existing mortgages.

The “Assetcoâ€, or the "bad bank" will hold the rest of the mortgages and will be responsible for repaying the £10.9 billion of outstanding government loans.

Gary Hoffman, chief executive of Northern Rock, said the bank was hopeful the restructure of the business would pave the way for it to be sold back into the private sector.

I've heard this a few times over the past few days, reminds me of the Bradford & Bingley 'split'.

I'm wondering if this is some back door way of increasing lending. If you remove the failing loans from the good bank(nationalise them), then the good bank can lend more as it doesn't have to hold as much in reserve against the bad, or potentially bad, loans. If you time this right it could lead to a boost of availability, which wouldn't last long, but could be very handy for them leading up to a general election.

Edited by CharlieChuck

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so 4% of its loans are more than 3 months in arrears, with the recession just kicked off, and still only lost 725 million.

they are making money somehow....guess their new lending is attracting high fees and interest.

And there "new" lending will end up making what losses in the long term?

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the banks are making money due to downsizing programmes & stopping ALL expansion.

They have also sold a lot of holdings in the past 2 years & cashed in as much of their (our) investment vehicles as possbile without alarming too many people.

:ph34r:

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Rock downsized staff in August 2008 paying off (give or take a few) 1300 employees, it then sold its new ivory tower head quarters at Rainton Bridge, Sunderland.

Still made a loss!

I haven't any sympathy with those who bought in and lost thinking a bounce back was going to happen or compensation would bail them out.

One word ignored...RISK!

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The residential arrears figures are pretty startling.

Total of 22,141 mortgages in arrears (ie. 3 months and over).

Of this lot, 12,442 are in arrears by over 6 months (up from 7,000 at 31/12/08).

Mortgages with arrears of over 12 months (!!!) total 3,667 - up from 741 on 31/12/08.

Obviousy NR are under strict orders to show maximum leniency and limit repos to the absolute minimum.

IMO a lot of these arrears will probably turn into unrecoverable bad debt, especially if NR does not repossess the properties.

Assuming an average mortgage of £120K (reasonable figure given that a high proportion of arrears must be on high multiple mortgages taken out at the height of the boom), we could look at a loss of over £2 billion !!!

And the arrears are getting worse all the time ..... up 28% between 31/12/08 and 30/6/09.

I think the government will probably end up transferring the deeds of a lot of these properties to a new specially set-up housing association and turn mortgage defaulters into social tenants.

Hey presto, no embarassing repos and big increase in the number of social housing !!!

Another shocking fact is that the NR Foundation (no doubt a super quango for loyal Geordy Labourites) is guaranteed to receivee £15 million a year in 2009 and 2010 at a time when plenty of genuine charities are going bust.

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Listening to radio2 Northern rock was the news lead story, comments by Peston telling us that its not as bad as it looks and that things could be getting better..............so no need to be too worried, oh thank goodness for that

Am I the only person who's getting a bit fed up with Robert Peston's impression of Lloyd Grosman whenever he's on TV? That awful drawn out way of speaking - "welllll whaaaat is happening to Noooorthern Rock is a consequence....."

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IMO a lot of these arrears will probably turn into unrecoverable bad debt, especially if NR does not repossess the properties.

I agree totally, the concept of "write-off" may be taken literally!

Another shocking fact is that the NR Foundation (no doubt a super quango for loyal Geordy Labourites) is guaranteed to receivee £15 million a year in 2009 and 2010 at a time when plenty of genuine charities are going bust.

The NR Foundation was (I am reliably informed) set up to try and put off would be hostile bidders when NRK was profitable and set up at the time they de-mutualised from a building society, all the brain-child of someone called Leo Finn, former CEO.

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