Northern Rock to be nationalised

[NoddY]

Northern Rock to be nationalised

http://news.bbc.co.uk/1/hi/business/7249575.stm

"Northern Rock is to be nationalised, the BBC's business editor Robert Peston has learned.

A consortium led by the Virgin group was leading bids to run the beleaguered bank, while a management buyout had also been considered.

But ministers have decided that nationalisation - the first such move since the 1970s - was the only option.

"They felt that the offers on the table did not offer enough to the taxpayer," Mr Peston said.

"It's a momentous moment. Nationalisation has become a dirty word associated with industrial failures of the past," he went on.

"Financial services, by contrast, have been considered the great British success story - so for such a seemingly growing bank to end up being nationalised is a big moment for the City and a big moment for the government."

Northern Rock got itself into financial difficulties last year because its business model left it ill-prepared for the global credit crunch.

It was forced to ask the Bank of England for emergency funding, triggering the first run on a British bank in more than a century. "

Should have let it go to the wall back in September. At least the 'assets' might be in public ownership.

[dude69]

don't forget that their company account is the best on the market, and now the risks associated have dropped dramatically.

I do hope the shareholders will get nothing.

[Sysman]

You just beat me that that announcement. I just heard it on the radio.

What a sad day.

[VectraMan]

It might mean when things pick up again the government can sell it at a big profit and give us all a tax rebate*. Better than just letting it die.

*Yeah okay.

[Platypus]

I do hope the shareholders will get nothing.

Under nationalisation rules, shareholders will be offered compensation for their holding, at a level set by a Government-appointed panel.

Investors could begin legal action if they are unhappy with the amount offered, with BBC Business Editor Robert Peston saying that it was "inevitable" that the government would be sued by shareholders who felt they had been "fleeced".


I'm genuinely confused here: the point of being a shareholder is to take the risk that shares can go up or down, yes? So how can they be "fleeced" except by their own greed when the management team they invested in screwed up?

[NickFitz]

Under nationalisation rules, shareholders will be offered compensation for their holding, at a level set by a Government-appointed panel.

Investors could begin legal action if they are unhappy with the amount offered, with BBC Business Editor Robert Peston saying that it was "inevitable" that the government would be sued by shareholders who felt they had been "fleeced".


I'm genuinely confused here: the point of being a shareholder is to take the risk that shares can go up or down, yes? So how can they be "fleeced" except by their own greed when the management team they invested in screwed up?

You are correct, but unfortunately greedhead bozos are incapable of understanding the bit about risk, being entirely consumed by their lust for reward.

Therefore, if shares go up they congratulate themselves on their own astuteness, and if shares go down they cast about for somebody - anybody - to blame.

As usual, it's all down to the fact that most people are idiots, yet have too high an opinion of themselves to realise that they are idiots, so when their harebrained schemes go haywire it must be somebody else's fault.

You see it all the time on this board in relation to property prices - if things go well and they make a killing on BTL then it's because they're so clever, but if it goes badly and they lose money it's all the Government's fault.

Given that the one irrefutable fact about the markets is that their behaviour is unpredictable, it stands to reason that "investment" is just gambling dressed up in a posh suit, and therefore any gains or losses are nobody's achievement or fault - they're just what happened in a random sequence of events, and to believe that responsibility or blame can be apportioned is to commit the logical fallacy called a category error.

[VectraMan]

I'm genuinely confused here: the point of being a shareholder is to take the risk that shares can go up or down, yes? So how can they be "fleeced" except by their own greed when the management team they invested in screwed up?

Indeed. It's not like they're nationalising a successful company, in which case the shareholders should be compensated. Essentially the Northern Rock has gone bust, and the shares are worth zero as a result.

[sappatz]

northern cock

Northern rock was a crappy british bank with a flawed financial model (all the refinancing via the interbanking market)
It should have gone BUST
now the taxpayer will pay for this mess !

[swamp]

Just think of those 5,000 call centre jobs up in Newcastle that will now be safe.

And at £25bn it's a bargain...

[beaker]

Numpties