Jump to content
House Price Crash Forum
Sign in to follow this  
Realistbear

N R To Pay Out A 60,000,000.00 Poind Dividend

Recommended Posts

http://business.timesonline.co.uk/tol/busi...icle2492892.ece

From The TimesSeptember 20, 2007
Taxpayer fury at troubled bank’s vow to pay dividend
Christine "Chrissy" Seib
Northern Rock yesterday vowed to press ahead with a £60 million shareholder payout, despite having been forced to obtain an emergency loan from the Bank of England to stay in business.
The move infuriated organisations representing British taxpayers. A spokesman for the Taxpayers’ Alliance said that Northern Rock shareholders should be made to “take a hair-cut” while the Government was underwriting the bank’s operations.

Slick! What a joke its all becoming.

Share this post


Link to post
Share on other sites

[sarcasm]

What's the problem? They are still a 'viable bank', albeit one with a broken business model, severe cashflow problem and a tarnished reputation who ignored advice given to them months ago. I think we as British taxpayers should be standing behind our struggling businesses like we did with heavy engineering, mining and the auto industry. Banks have had a rough time of it over the last decade with only Billions of pounds made in profits each year, it's no wonder they need our help.

[/sarcasm]

Edited by redalert

Share this post


Link to post
Share on other sites

Let's dispel the myth that hard working taxpayers have given a free hand out to Northern Rock.

They haven't. The BoE is charging NR handsome rates on any borrowings and have secured from NR substantial assets to protect that money in case of default.

The idea that NR shareholders will be receiving free handouts of taxpayers money is ludicrous.

Share this post


Link to post
Share on other sites
Let's dispel the myth that hard working taxpayers have given a free hand out to Northern Rock.

They haven't. The BoE is charging NR handsome rates on any borrowings and have secured from NR substantial assets to protect that money in case of default.

The idea that NR shareholders will be receiving free handouts of taxpayers money is ludicrous.

Substantial Assets! Toxic Waste more like it! No commercial bank will touch them with a bargepole. Maybe it has a little to do with the shocking losses these MBS's are promising. And the BoE is accepting them at face value! Its not ludicrous, its a spineless bailout, and its an outrage!

Share this post


Link to post
Share on other sites
Substantial Assets! Toxic Waste more like it! No commercial bank will touch them with a bargepole. Maybe it has a little to do with the shocking losses these MBS's are promising. And the BoE is accepting them at face value! Its not ludicrous, its a spineless bailout, and its an outrage!

It slipped out at some point during TV discussions about Merv's grilling by Select Committe that NR had tried to sell assets but couldn't and only then went to B o E. Wish I could remember where I heard it and who said it - whether it was Merv himself or a commentator - sorry, memory isn't what it once was. Anyway, point is, if the market wouldn't touch NR's "assets" what on earth is the B o E doing taking them at face value?

Share this post


Link to post
Share on other sites
It slipped out at some point during TV discussions about Merv's grilling by Select Committe that NR had tried to sell assets but couldn't and only then went to B o E. Wish I could remember where I heard it and who said it - whether it was Merv himself or a commentator - sorry, memory isn't what it once was. Anyway, point is, if the market wouldn't touch NR's "assets" what on earth is the B o E doing taking them at face value?

Gordon ordered Merv to bail them out for political reasons.

:unsure:

Share this post


Link to post
Share on other sites

we should all just cut with the bull, we all know NR is technically insolvent, could not sell assets to save its life now and is trying to pay off the investors dividend after which they will happily let NR sink like a stone.

Share this post


Link to post
Share on other sites
we should all just cut with the bull, we all know NR is technically insolvent, could not sell assets to save its life now and is trying to pay off the investors dividend after which they will happily let NR sink like a stone.

Exactly!

Share this post


Link to post
Share on other sites
It slipped out at some point during TV discussions about Merv's grilling by Select Committe that NR had tried to sell assets but couldn't and only then went to B o E. Wish I could remember where I heard it and who said it - whether it was Merv himself or a commentator - sorry, memory isn't what it once was. Anyway, point is, if the market wouldn't touch NR's "assets" what on earth is the B o E doing taking them at face value?

But they could have sold the assets.

Telegraph

However, the buyers new NR were in a fix so demanded very favourable terms. NR decided to go with the BoE.

Share this post


Link to post
Share on other sites
Let's dispel the myth that hard working taxpayers have given a free hand out to Northern Rock.

They haven't. The BoE is charging NR handsome rates on any borrowings and have secured from NR substantial assets to protect that money in case of default.

The idea that NR shareholders will be receiving free handouts of taxpayers money is ludicrous.

Exactly right. What a lame, misleading rabble-rousing headline. Shareholders are the real ones carrying the can for NRK, god help them.

Share this post


Link to post
Share on other sites
It slipped out at some point during TV discussions about Merv's grilling by Select Committe that NR had tried to sell assets but couldn't and only then went to B o E. Wish I could remember where I heard it and who said it - whether it was Merv himself or a commentator - sorry, memory isn't what it once was. Anyway, point is, if the market wouldn't touch NR's "assets" what on earth is the B o E doing taking them at face value?

It was Merv, very briefly, during the broadcast proceedings. Don't think there is much wrong with your memory or your attention span.

Share this post


Link to post
Share on other sites
But they could have sold the assets.

Telegraph

However, the buyers new NR were in a fix so demanded very favourable terms. NR decided to go with the BoE.

The assets were, by definition, worth whatever the market was prepared to offer on the day NR tried to sell them. The market offer was less than what NR was prepared (could afford?) to accept, and they went to a non-market lender instead.

It's now extremely likely that the mortgage collateral being offered by NR is worth nowhere near its face value, but no-one can afford for that collateral to be properly valued, because to do so would be to expose how rotten the system is. Thus the charade continues, for a while.

Share this post


Link to post
Share on other sites

I find this "taxpayers" funding NR story bizarre.

Correct me if I am wrong, but the BoE will be providing liquidity to NR (which apparently they STILL haven't done anyway) and the (up to) £10bn open market liquidity at penal rates. In addition they will be taking collateral at a large discount to valuation (I'm sure they will be VERY careful about their valuations), and further to that will have the ability to call for additional collateral in the event some of the original security goes bad.

For 3 months.

This is a PENALTY to the NR. Not a taxpayer handout. Hence the reason the market's don't want their shares.

I don't even see how this is inflationary. IF the liquidity offer is taken up and they issue short-term bonds, won't they just buy them up again at the end of it?

Where's the problem exactly?

Share this post


Link to post
Share on other sites
I find this "taxpayers" funding NR story bizarre.

The taxpayer offered to take on a risk at a price that no-one else would.

In addition they will be taking collateral at a large discount to valuation (I'm sure they will be VERY careful about their valuations), and further to that will have the ability to call for additional collateral in the event some of the original security goes bad.

Do you have a reference to support your claim about a large discount to valuation? I am glad you are VERY sure, but it has been alleged that the Fed was less so, and I would be reluctant to trust BoE any more than that. Remember, it is currently not possible to accurately value mortgage based debt.

This is a PENALTY to the NR.

Nonsense. NR would not have *asked* for a penalty.

Not a taxpayer handout. Hence the reason the market's don't want their shares.

Call it what you like. They benefit from a credit line that would not be available to them if it was not for the taxpayer, and then after BoE changed their position from "we won't encourage moral hazard by bailing out reckless lenders" to "we will".

I don't even see how this is inflationary. IF the liquidity offer is taken up and they issue short-term bonds, won't they just buy them up again at the end of it?

It is certainly a lot less deflationary than NR going down with depositor's money and all.

Where's the problem exactly?

It may be that the bailout was the correct thing to do. I don't know if a systemic collapse of the UK banking system would have been the alternative, though it seems clear the trouble would not have stopped at NR (and might not yet). On the other hand, this is bound to store up more problems for later. The taxpayer may also have to ingest any loss that may result if the collateral given to the BoE turns out to be worth less than the money lent against it. I doubt anyone can know whether that will happen or not. If it does, there is also the slight matter of the guarantee of deposits that the taxpayer will need to honour.

Edited by MongerOfDoom

Share this post


Link to post
Share on other sites

As a brand new NR shareholder (since yesterday) @ under £2 a share what is the criteria for receiving this years dividend?

I assume You had to have bought your NR shares a while back to be due a divi payment but then wouldn't care because anyone who bought before last week, or even the last 2 days would have seen their share holding value gone to crap!!

Anyone know?

M

Share this post


Link to post
Share on other sites
As a brand new NR shareholder (since yesterday) @ under £2 a share what is the criteria for receiving this years dividend?

I assume You had to have bought your NR shares a while back to be due a divi payment but then wouldn't care because anyone who bought before last week, or even the last 2 days would have seen their share holding value gone to crap!!

Anyone know?

M

Goes ex-div on 26-Sep-07 - so you're just in time really. So if you don't get cold feet before the 26th you'll get your dividend on 26-Oct-07. Only an interim dividend mind, so just 14.2p a share. Final div will be in May next year, or not. :ph34r:

edit: minor error

Edited by christh

Share this post


Link to post
Share on other sites
Goes ex-div on 26-Sep-07 - so you're just in time really. So if you don't get cold feet before the 26th you'll get your dividend on 26-Oct-07. Only an interim dividend mind, so just 14.2p a share. Final div will be in May next year, or not. :ph34r:

edit: minor error

Cool, I'm in for the short long haul, lol, to either takeover, recovery or bust, whatever that is, weeks, months, years. The shares will either go to nothing or make a nice return. Have autosell set to 99p though! lol.

M

Share this post


Link to post
Share on other sites
Cool, I'm in for the short long haul, lol, to either takeover, recovery or bust, whatever that is, weeks, months, years. The shares will either go to nothing or make a nice return. Have autosell set to 99p though! lol.

M

As long as you realise that the share price should (everything else being equal) drop by the price of the dividend when it goes ex-dv...

Edited by sprouty76

Share this post


Link to post
Share on other sites
As long as you realise that the share price should (everything else being equal) drop by the price of the dividend when it goes ex-dv...

They have a div cover of 2 though so according to their books their net earnings are such that can easily afford the dividend payment. Not a risk I'm willing to take, but good luck to you marky.

And as sprouty says the share-price will take quite a pounding on the ex-div date, even though it's only an interim, it may even cause a panic amongst shaky investors that don't understand the dividend payment process.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 350 The Prime Minister stated that there were three Brexit options available to the UK:

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.