Northern Rock's "bad Bank" Returns To Profit In First-Half

[interestrateripoff]

http://uk.reuters.com/article/idUKTRE6720OZ20100803

Northern Rock Asset Management Plc, the remnants of Britain's first major victim of the credit crisis, said on Tuesday it had returned to profit in the first half of the year after heavy losses a year ago.

Northern Rock's so-called "bad bank" -- one of the two legal entities into which the original company was split -- reported a pre-tax profit of 349.7 million pounds compared with a loss of 724.2 million a year earlier.

The results build on a trend set by larger rivals such as HSBC and BNP Paribas which have also posted higher profits thanks to lower bad debt charges.

Last week, state-owned UK mortgage lender Bradford & Bingley also said it had swung to a first-half profit after making a loss last year thanks to lower costs and mortgage arrears.

Earlier this year, Northern Rock was officially split into two different divisions representing Northern Rock's "good" assets and its "bad" assets.

Northern Rock Asset Management (NRAM) represents the "bad" bank which manages existing mortgages and unsecured loans.

The other division -- Northern Rock Plc -- is the "good" bank which comprises the company's new mortgage and savings division, which the government eventually hopes to sell.

UK Financial Investments, the state body which manages the government's stakes in fully and partially nationalised banks, plans to merge Northern Rock Asset Management with Bradford & Bingley.

It appears that Gordon did indeed save us all.

If this keeps up the govt might even manage to sell the bank bank.....

Everything is coming up roses in this glorious recovery.

[Confounded]

http://uk.reuters.com/article/idUKTRE6720OZ20100803

It appears that Gordon did indeed save us all.

If this keeps up the govt might even manage to sell the bank bank.....

Everything is coming up roses in this glorious recovery.

Wow what a surprise, a company that has all the bad decision taken off them by the tax payer makes a profit on the good stuff. How do you get a banking licence?

[ralphmalph]

Wow what a surprise, a company that has all the bad decision taken off them by the tax payer makes a profit on the good stuff. How do you get a banking licence?

No, this is a profit on the bad stuff. NR was split into so called good and bad parts. The total mortgage book was 90bill at the time and 80bill (>90%) was classified as bad loans and this went to the bad bank. 10billion was classified as good loans and this stayed with what we know as Northern Rock. The profit above was on the 80billion of so called bad loans and it was about 200million so we are currently getting a return of 1% on the 22.5billion of taxpayers money that was invested in the bad bank by super Gordo. Seeing as he had to borrow this money at 4% on the markets we can all see the financial genius of the man.

[SarahBell]

The profit above was on the 80billion of so called bad loans and it was about 200million so we are currently getting a return of 1% on the 22.5billion of taxpayers money that was invested in the bad bank by super Gordo. Seeing as he had to borrow this money at 4% on the markets we can all see the financial genius of the man.

So where did the £200M go?

[ralphmalph]

So where did the £200M go?

Merv's bonus.

[Confounded]

No, this is a profit on the bad stuff. NR was split into so called good and bad parts. The total mortgage book was 90bill at the time and 80bill (>90%) was classified as bad loans and this went to the bad bank. 10billion was classified as good loans and this stayed with what we know as Northern Rock. The profit above was on the 80billion of so called bad loans and it was about 200million so we are currently getting a return of 1% on the 22.5billion of taxpayers money that was invested in the bad bank by super Gordo. Seeing as he had to borrow this money at 4% on the markets we can all see the financial genius of the man.

Thanks for the clarification, that is good news.

So so far the BOE has made a profit on it's intervention, the banks are making a profit from the margin on rates, unemployment is far lower than predicted and house prices have recovered to near record bubble levels. We should have a financial crisis every recession.

[interestrateripoff]

The profit above was on the 80billion of so called bad loans and it was about 200million so we are currently getting a return of 1% on the 22.5billion of taxpayers money that was invested in the bad bank by super Gordo. Seeing as he had to borrow this money at 4% on the markets we can all see the financial genius of the man.

I can't believe we voted this man out, he really should be put in charge of big business. So the taxpayer is out of pocket by only £600m then?

So before the taxpayer makes any sort of return this bad bank needs to be generating profits in excess of £800m a year? Can this mortgage book generate that sort of profit?

I wonder what the total cost of this financial mess will be.

[Bloo Loo]

not only that, HPI in the first half has added value to each and every mortgage way in excess of the 2.5% interest they attract/or not. Even if 5% defaulted, they could still turn a profit on the rest.

course, second half, looking at 10% falls, and the picture at the bad bank may look a little different.

[ralphmalph]

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7923707/Northern-Rocks-bad-bank-makes-a-profit-good-bank-a-loss.html

You could not make it up. The GOOD part of Northern Rock has just announced a LOSS. Yep the good part has too many savers and not enough highly leveraged together mortgages in negative equity so can not afford to pay its savers.

Next govt scam, put the good and bad together again, more fees to the bankers, so we have a mediocre bank, not good, not bad, just mediocre.

[Confounded]

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7923707/Northern-Rocks-bad-bank-makes-a-profit-good-bank-a-loss.html

You could not make it up. The GOOD part of Northern Rock has just announced a LOSS. Yep the good part has too many savers and not enough highly leveraged together mortgages in negative equity so can not afford to pay its savers.

Next govt scam, put the good and bad together again, more fees to the bankers, so we have a mediocre bank, not good, not bad, just mediocre.

The World gets very complicated when you continually meddling to prevent the natural course of events.

Edited August 3, 2010 by Confounded

[Bloo Loo]

http://www.telegraph...ank-a-loss.html

You could not make it up. The GOOD part of Northern Rock has just announced a LOSS. Yep the good part has too many savers and not enough highly leveraged together mortgages in negative equity so can not afford to pay its savers.

Next govt scam, put the good and bad together again, more fees to the bankers, so we have a mediocre bank, not good, not bad, just mediocre.

the good bank pays bonuses.

[interestrateripoff]

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7923707/Northern-Rocks-bad-bank-makes-a-profit-good-bank-a-loss.html

You could not make it up. The GOOD part of Northern Rock has just announced a LOSS. Yep the good part has too many savers and not enough highly leveraged together mortgages in negative equity so can not afford to pay its savers.

Next govt scam, put the good and bad together again, more fees to the bankers, so we have a mediocre bank, not good, not bad, just mediocre.

Unbelievable.

Would the bank had been better off being left as one entity?

Yes I know it should have been left to go bust, but I was wondering if your going down the meddling road whether leaving it as a single bank would have been better?

[R K]

Hurrah!

6 x Together mortgage anyone?

[Executive Sadman]

Said on SKY news Northern rock made a profit of £350mill, but still owe the taxpayer £22billion. So i guess itll only take them 65 years or so to pay us back.

[shedfish]

so the Good Bank made a loss, the Bad Bank a profit... they need to speak urgently to either Accounts, or Marketing

[Laura]

"The loan book is good" said the badger.

It pains me to admit that I was one of those who poured such scorn upon his statement.

Truly we have witnessed a miracle

though one would like to see somewhere a big thank you to the UK tax payer without whose co-operation this rescue of an upstart would not have been possible.

[topliner]

Still on the subject of Northern Rock, I was told (from a very reliable source) and I think it has been press reported that 1200 of their employees are being TUPE transferred to Bradford & Bingley from the NRAM "Bad Bank" and they are facing around 650 redundancies from both voluntary to compulsory groups in the "good bank" part by the end of September time.

I wonder what that will do long term. I suppose that is to make "good bank" look a better buy in the private sector?

topliner