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Northern Rock Makes A £500m Loss

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http://news.bbc.co.uk/1/hi/business/7542102.stm

"But he stressed that even greater losses would not be a problem for the bank's customers because it is now state-owned and cannot fail"

It is to the tax payer 500m down the shitter

Poor Gordon. Isn't £500m about 1/10th of the stamp duty he stole from house buyers each year during the boom time.

So, that's now a hole of £5.5bn which, if I am not mistaken, is roughly equivalent to 2p in income tax.

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On a brighter note, this is a drop in the ocean compared to the losses to be made when Gordens attempt to prop up the housing market goes tits up next year- we'll be looking back at this and laughing at how a mere 500 million seemed a lot money back then- happy days. :P

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http://news.bbc.co.uk/1/hi/business/7542251.stm

Northern Rock has announced bigger-than-expected losses of £585.4m for the first six months of the year.

Much of the loss came from the charges it takes to cover losses from struggling mortgage borrowers.

But Northern Rock also paid back £9.4bn of a loan from the Bank of England, reducing the amount owed to £17.5bn.

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http://business.timesonline.co.uk/tol/busi...icle4462416.ece

The number of mortgage borrowers more than three months in arrears has doubled in the space of six months to 1.18 per cent of the overall home loans book. Rock warned that it was particularly vulnerable to the housing market deterioration because of its past practice of offering big loans relative to the value of homes.

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Goverment offers 2% fixed loans to troubled home owners....

I'm just waiting for the Headline like this, support the bad, screw the good for every penny.......

Gordon cannot control anything, longer he stays the more problems he will be responsible for...

Unlike Blair who is kicking back at Camp David, Grinning as usual...........

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One important thing here is from the balance sheet page 22, assets still exceed liabilities by 2bn after the 585mn write off, so a 8-10% fall in house prices since xmas has written off 1/5 of it's equity. What matters is how much of that 2mn equity will be lost while this unravels, because when that runs out, the taxpayer starts paying.

Don't get me wrong, the loan book is a pile of sh!t, they will get more bad loans, and it will end up costing the taxpayer.

As I said yesterday, The ex-shareholders are due to be compensated soon, the value will be calculated soon. On the back of a huge loss and 3bn extra needed via injection by the government, this seems like extremely convienient timing as it effectively ruins their chance of getting compensation for these shares. Has the current loss been overstated?

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http://news.bbc.co.uk/1/hi/business/7542102.stm

"But he stressed that even greater losses would not be a problem for the bank's customers because it is now state-owned and cannot fail"

It is to the tax payer 500m down the shitter

you're dead right there are some shocking and very devious 'verbals' now being used. Notice how it's no longer "temporary public ownership" instead it's an open admission; "the bank that was nationalised in February"? Like so many I heard 500mil loss and actually thought for a nano second "that's not as bad as first thought" but you forget the writedowns and the mass injections of capital that I doubt anyone (other than EU/BoE/Govt mandarins) has a handle on how much and the fact that just another casual 3bil is chucked at the insoluble problem today is insulting... Notice the "They're making better progress than expected progress at paying back the govt loans.." Yeah right, that good that they needed another bailout of 3bil, you couldn't make it up. That 3bl must be for 'liquidity reasons' obviously <_<

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Prestons Blog

Arrears have gone from 0.45% to 1.18% in 6 months, a 160% increase. if that carries on for another 6 months arrears will be at 3.1%. With �84bn loaned to customers, such an increase in arrears could easily translate into a further �1.6bn loss.

A comment from the blog is this persons maths correct???

In six months time will the taxpayer bank have lost £1.6bn?

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Notice how its just the small numbers that get published!!! Here's a statement that I would like to somehow disprove.

"75% of sheeple in the UK do not know what a billion is"

I bet they would all fall over if they could comprehend the enormity of the numbers.....

Instead of £500m lets call that £500

Thats the loss NR made. To help them with this, the Gov have given them £3,000 on top of the £17,000 they have already given them. Oh and they have given all the other banks £75,000.

Even on this scale £500 quid becomes a bit of a small pi55 in the ocean compared to 75,000.

Now consider that this scale is 1 to 1 million

1 to 1 MILLION FFS !!!! - (sbn realises the enormity of the numbers himself and falls over)

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Prestons Blog

A comment from the blog is this persons maths correct???

In six months time will the taxpayer bank have lost £1.6bn?

The maths is sort of right initially, what it's saying is if the rate of increase in defaults carries on at it's current rate of expansion then 3.1% will be in arrears. He then seems to say if a 1.18% default equals 585mn loss then a 3.1% default equals 1.6bn, which is where it becomes gibberish.

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This is probably just going to get worse and worse due to the Government's insistence on making NR pay back their loans as soon as possible.

All that is going to happen is that the good business will switch to other lenders as people's fixed rate deals end, leaving NR with a loan book entirely made up of customers that other banks won't take.

I'm probably missing something here, but how can it be in the taxpayer's best interests for NR to downgrade its loan book even further by encouraging customers to leave at a time when only the better customers are able to remortgage?

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But the Treasury is probably being prudent in allocating as much as £3bn, for a couple of reasons.

1) Unlike other banks, Northern Rock has just one shot to recapitalise itself, because any such injection needs state-aid approval by the European Commission, which is typically granted only once.

2) It still has much reorganisation to carry out and - with prospects for the mortgage market looking pretty grim - it's probably as well to secure a bit more capital than it needs immediately.

From Prestons blog.

This does get even more worrying so the govt has one shot at cash injection and is going for £3bn, considering the losses are only going to go up as the business plan is to get rid of the good and keep the crap no one else wants, is £3bn going to be enough? Will £3bn see it through to 2010, considering the default rates are only going to up.

The banks isn't really getting any new business so is there any real point in supporting the Rock any longer?

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One important thing here is from the balance sheet page 22, assets still exceed liabilities by 2bn after the 585mn write off, so a 8-10% fall in house prices since xmas has written off 1/5 of it's equity. What matters is how much of that 2mn equity will be lost while this unravels, because when that runs out, the taxpayer starts paying.

Don't get me wrong, the loan book is a pile of sh!t, they will get more bad loans, and it will end up costing the taxpayer.

As I said yesterday, The ex-shareholders are due to be compensated soon, the value will be calculated soon. On the back of a huge loss and 3bn extra needed via injection by the government, this seems like extremely convienient timing as it effectively ruins their chance of getting compensation for these shares. Has the current loss been overstated?

Who audits it ?

National Audit Office ?

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  • 399 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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