The Friday Five: winners and losers of the Northern Rock sale

All these Virgin deals make a false assumption. This is that Branson is somehow regarded as someone we would want to be associated with.

This is untrue. His image to me and my friends is sleazy and unpleasant. When NTL absorbed Virgin cable and took on the Virgin name, most NTL cable subscribers kept our NTL e-mail addresses.

The day they insist on me having an account with "Virgin" after it is the day I move to a new supplier.

So Branson can stick that up his beard. Nor would I bank with the bearded clown.

I have never met Mr Branson, so I can not make comment about him. He may appear a little eccentric, however I doubt he would have been quite as successful if he was a clown.

Poor journalism, expected better from citywire. These figures ignore the £1.2bn of fees and interest the government has earned from NR so far (3x so called loss). Also the so called "toxic bank" is profitable unlike the bad bank. Calling the unsaleable residential portfolio toxic is also wrong, these are not NINJA loans, this is not NAMA, the arrears aren't even that bad let alone toxic (0.26% 08/11). The Bank was split in two based not so much on quality but based on deposits. Hence the good bank has 1:1 funding (makes it easier for a purchaser). The issue is they is no secondary market for mortgage portfolios hence UK Gov stuck with the unsaleable rump.

no existing virgin customers will get better rates out of this. Unless they change products or force the issue and so are no better off than anybody else. Do you no anything about banking/finance?

sorry should have finished....." hence UK Gov stuck with the unsaleable rump" ..for now. If market improves Uk can sell, otherwise we can continue to collect repayments/profits from thousands of existing and nontoxic mortgagees.

From the desk, the tax payer gets stuffed as usual.

Vince Cable needs to come back to the class room for extra lessons on arithmatic.

£1.4Billion minus £747 = £653 loss.

This in anyone eyes is not a good deal for the punter.

Stay behind Cable for some extra tuition.

Would this happen in any other country?

One has to concentrate on the cost of setting up a large 'Bank', together wiith the cost of establishing a fully functional branch network.Let me assure you he has made a good buy and now is force in the market...

Headmaster cannot spell "arithmetic"!!

Who needs extra tuition?

Branson is always seen as a great businessman but was quoted -

"Virgin's offshore status has been crucial to its development: it allowed money to move from business to business without massive tax liabilities. "If we had not done it the way that we did, Virgin would be half the size that it is today," argues Branson."

Seems the poor old tax payer has already given this "super businessman" a leg up many times in the past. Taxpayers, give yourselves a round of applause for helping in the success of the virgin empire(s).

Selling out at a loss cannot in any sense be good news for taxpayers.

If this is the good bank, with reliable earnings and soon going back into profit, surely a proper course would be to keep it, to offset continuing profits against anticipated losses at the bad bank.

Should the bad bank unexpectedly reverse its fortunes, and an overall surplus emerge, then opportunity to compensate original shareholders arises; either in kind with new shares or from receipts from sale (after taking generous management fees).

That way 16000 taxpayers who were badly treated would be recompensed in part; while taxpayers at large would also gain from public stewardship. The present way surely smacks of short term politicking to make near term Treasury book balancing look better: the classic Civil Service game of managing cost of ownership irrespective of capital asset loss.

MC sums it up - not a loss at all - but that's not the way the papers like to hype it.

As I said yesterday (to some subsequent criticism I might add) IT STINKS!

Why anyone should do business with this parasite is a mystery to me. Perhaps it has been forgotten that Mr B forced the delisting and taking into private ownership of Virgin despite shareholders' and Stock Exchange objections. And now he says that he intends to list NR/Virgin in a few years time! He also appears to be an offshore (ie non-taxpaying -) busiinessman - or at least his companies are, which is absolutely wonderful for UK PLC and every British taxpayer.

Then, as a NR shareholder - I still have the certificates, though I'm told they're worthless - I bought additional shares in NR during the crisis to help in stopping Mr B getting his hands on NR, The alternative consortium, which had the support of most of the other shareholders, recognised the strength and loyalkty of the Brand, and believed that it was still a viable business, as there were plans to add £500M in capital to the bank - but Ghastly Gordon and the treasury imposed impossible constraints on the bidders - and then after nationalisation, removed those constraints. NR is still very much a great viable business today.

The other uncomfortable truth about this fiasco is that NR's mortgage arrears were the lowest in the UK industry in 2007, and probably still are today, so the so-called "bad bank bit" is poppycock; it's a huge profit-making money-machine.

Not only does Headmaster's spelling need to improve, but his maths excludes the earnings already made and the further tranche which should be paid if NR is profitable, and furthermore he has failed to appreciate that the part of the bank left in taxpayer's hands has some value. Our children need better headmasters than this, especially given their pay package. Or perhaps Headmaster is really a Fleet Street hack.

As an NR saver I will be watching carefully as Branson has a reputation for stuffing everyone else. He started off in business with his record company paying his staff peanuts and defrauding Customs and Excise by selling records in the UK on which he had reclaimed purchase tax. There's a good book on this and many other dubious acts of his which is a good read.

Today's report in the FT, if true, that Virgin is using NR's current capital base to provide one third of the money for its purchase re-inforces suspicion that sale is little more than a Treasury support exercise in wider book balancing ahead of the Autumn statement; and that the timing has little to do with achieving best value for the taxpayer.

In this short term exercise, presumably risk with the bad bank is carried forward as potentially bad news for later; when potential to offset it with assets from the good bank are forgotten. Or perhaps, as other commentators have suggested, the bad bank is not quite in the straightened circumstances thought so far.

Either way, if the good bank is sufficiently strong to allow asset stripping at the outset, then surely shareholders have a demonstrable case in Brussels that NR had value and that compensation should have been paid.

johnnym

the treasury imposed impossible conditions because the london bankers wanted to kill the northern upstart (they started the process by starving it of funds when it grew too big for its boots)

Sorry JohnnyM but your comment re NR arrears in 2007 is wrong. Far from being less than half the industry average as they claimed they were, in fact, several times the industry average. The figures claimed were pure fiction, based on the most extreme 'massaging'. This was acknowledged by Ron Sandler in 2008 and emphasised by the FSA fines levied on former directors. The mortgage book was in a terrible state, having taken on a level of risk that would have horrified even sub-prime lenders. The valuation of the company at 'nil' was correct. And yes I regret that I was a shareholder.

As a businessman, Branson has to be pally with whatever slime infests Downing Street.

I know this: but cannot forget a picture of him talking to Thatcher while leaning on the mantelpiece of number 10 and smiling at her. I still want to puke 30 years later.

Seems to be an awful lot of paranoia out there. Seems to me the real question is: if the bank is worth say 750m when it it now working, how come it was worth 1.5 billion when it was bust? Was it the last government whio were the idiots for paying too much?

@Christopher

Or is it that there is value in the bad bank?

May I make a plea for constructive criticism and useful informatiom sooner than abuse. I don't feel that abuse contributes to the debate or my knowledge.

Bob the electrician

i see "honest john" osborne has dunitagain-who in their right minds sells a profit making asset at the bottom of the market at a knock down price? the bloke in chargeof the economy!!!!!!!!!stupid. what a crass act!!! ive given up on politics and their purveyors- as good a set of self serving t$$$$$s as you could collect. TIP----dont encourage them: dont vote!!!!!!

Has anyone got a good grasp of the situation of the good and bad banks created from Northern Rock. More specifically what have we, the people of Britain won or lost as a result of the Chancellors intervention. I would appreciate them sharing this wit me.

He is saying that he was restricted in his options by an agreement made by Alistair Darling in the last government.

Can anyone explain why such agreements are binding whilst those made with public service workers on their conditions of work, retirement age, and pensions are not.

Another thing that is puzzling me is why making old people work until the are seventy or more will not have an adverse effect on youth unemployment?

Bob the electrician.

Bob - all contracts have terms and conditions. Employment contracts have minimum notice periods so if staff become too expensive they can be made redundant one way or another. This is common sense and necessary to allow organisations to survive - I have been made redundant 3 times. An alternative is for staff to accept reduced pay, which has often happened in the private sector. So to amend pension and work arrangements is not a breach of contract even though many feel it is as they have not understood their contracts.

Over the past 20 years or so the UK has been going down the pan as our trade balance has become worse. In a perfect economic system, sterling should have steadily depreciated, making our labour cheaper until we became more competitive, could buy fewer imports and could export more. But instead, owing to cheap credit, people and our Government spent shed loads of other people's money which made the GDP rise. This was taken as "prosperity" and so our Government spent even more. 1m extra public service jobs were created and there was no check on the increasingly generous pay package they were receiving in pensions and higher pay. Do you know how much your GP or headmaster is now paid compared with, say, 1o years ago?

Like Greece we could simply cut pay and pensions at a stroke. Or we can carry on much as before with some trimming as per the Hutton report, but even so, this will not reduce spending anything like enough, So Sterling will slide more whch will mean :

1. Our real wages decline

2, Some foreign workers may decide to leave the UK

3. UK people will have to fill the vacancies thus reducing unemployment

4, UK exports should improve thus creating more jobs

5. General wage levels will be low so that more marginal activity can thrive

This will not happen quickly and there will be a great deal of realignment - for example those in the importing trade will suffer, as will some in the service industry. We will not be able to afford the level of public expenditure even after the pensions have been reduced to more acceptable costs, so more will go there and benefits will have to be cut for both affordability and getting people to work rather than claim..

Eventually we will have much higher employment but with pay at far lower levels. This is inevitable simply because we live in a world which is becoming more competitive and globalised with emerging economies. The speed of change will make it highly unlikely that the UK can find a big enough niche in markets to demand a sustainable premium as this will rapidly be eroded.

Tough - yes - but as a Nation we have been living with a blindfold on for too many years and kidding ourselves that we are special. There is no point in marches, strikes etc as they will only serve to make the position worse. They will do to our country what the strikes of the 60's and 70's did to our main industries when pay rose but should have fallen - so that all the workforce lost their jobs when steelworks and car plants shut in the face of overseas competition.

Yes - as a Nation we have had our heydays and then kept on spending even more as we started to slip down the curve So we have a long way to fall to rejoin the curve (let alone pay for our overshoot).

A rather grim future, but the sooner we all understand it the less severe it will be. So anyone who winges about having to pay more for a good pension and work longer - just realise how good any deal is and join the real world.

Bob - I think Jon puts the position on Government Service contracts very well.

As for NR, my understanding of the timescale restriction (end of 2012) for its disposal was put on by the EU because the "saving" of NR by Government broke Market subsidy rules.

My suspicion remains that disposal of the good bank now has more to do with keeping national debt reduction seemingly on track, ahead of next week's Autumn statement, than securing best possible value for taxpayers.

If the good bank really can be asset stripped to help pay for its own purchase, then I continue to wonder whether the bad bank is still in the bad way previously thought. With interest rates having been kept down over the past 2 years, and debt starting to inflate away, forecast default could be lower than anticipated. I am unaware of any recent published figures or how much debt has been written off and/or sold on for a song.

Perhaps others are better able to enlighten....

Jon

Ok I will accept what you say on Conditions of employment but why did't this apply to Fred Goodwin? Please don't say we had to give Fred his huge payouts to stop him going to the foreign competition. It seems to me that it would have been a win win situation if he had gone abroad and wrecked the competion and let wiser counsel prevail at home.

I also agree with what you say about Marches and strikes. They look very much like cutting off your nose to spite your face, to me.But, apart from doing nothing, what can the workforce do to resist management doing things to the detriment of workers and the country?I really would like an answer to this and please don't say vote.

It would have been a good thing if the workers had been able to stop the destruction of our manufacturing industry. We would not have had to maintain employment by creating none jobs.

I can see why nice people who went to good schools and do not get dirty, think it would be a nicer world without dirty rough people who can't speak properly like bin men, sewage workers and coal miners, But the reality is that without refuse and sewage being being cleared away and without the power from coal it would be a nastier world. I would lke this fact to acknowledged and appropriate incentives given to the people who do these jobs but it seem to be that the opposite is the case. I cannot understand why a bigger incentive is required to get someone to go and sit in a warm office and clean shirt, that to go down a mine or sewer or empty refuse bins in the rain.

I've worked heavy dirty and dangerous and i've worked light,clean and safe and believe me safe and clean is better. This is why I would like fairer treatment of the people who do the rough jobs that make my life more pleasant and healthy.

Bob the electrician

Bob - Fred Goodwin was a disgrace, but even if we took all of his pension and handshake off him it would not make a dent in the deficit.

Workers might have been able to stop the destruction of our manufacturing industry if they had adopted efficiiency and not demanded so much. But they made our big industries totally uncompetitive. We are seeing a change in their attitudes - look at Jaguar Rover - but too late to save much.

It is nothing to do with "good schools" or "clean jobs". The problem is that public service pay packages have become too high - surely you do not think that those with dirty jobs can be paid whatever they like and then use your arguments if anyone notices that they are so well off. Street cleaners in Birmingham were earning up to £50k plus their very very generous pensions until the Council had to introduce sanity and cuts after women workers wanted the same.

I have cleaned factories in the past, but would not suggest that such a job should be paid more than, say, a nurse or teacher. I think that your idea of fair is not perhaps accepted by those who professionally benchmark jobs.

In any event we ALL have to realise that we cannot maintain the status quo, and so we ALL have to tighten our belts, I cannot see why those doing the dirty jobs should be exempt - ie get a huge pay rise compared with others.

And most in the private sector have seen their pension benefits being halved or more. Is it right that having suffered such a hit they should also have to pay far more for other people's pension who claim immunity from our National ills? A "modest" pension of £10k index linked now requires a pension pot of some £350,000.So a binman on £30k would finish with an asset worth half a million. How can anyone in an average job not in a DB pension scheme build up anything like this for their retirement?

If you really look at the facts and figures the pay package for sewer workers, binmen and street cleaners is surprisingly high. Just because they are doing an "essential" job does not mean that they should be paid a king's ransom. Otherwise the cleaners in an office would get paid as much as the Chairman. And there are plenty of young unemployed who would do their jobs for less.

Claiming that "essential" workers should have more is an emotional chant by those in public service and not factual or rational. And it is used despite the fact that we have far too many public non-jobs in the hope that the public will shrink from accepting the cuts needed to make our public spending affordable..

I like your point about Fred. Just a couple of million would make a huge difference to me but be imperceptible in the national debty.

I look forward to the postman bringing the cheque. As he will obviously be overpaid so I will not give him a tip. I need all the money I can get.

To put this into context today, a think tank has reported that we aare drawing near to Victorian levels of inequality. Presumably thiswill result in Victorian levels of poverty.

I agree that no one should be paid whatever they like but this should include MPs, Bankers and those employed om the boards of the companies that we share holderss own.

Bob the electrician.

ps If I could have earned £50 k emptying bins in Birmingham I would be Bob the bin man

an english admiral by the name of byng was shot for "cowardice". as the french put it"pour encourageur les autres" fred g should be in the same(SIC!) boat-its not the pragmatics ITS THE MESSAGE IT SENDS!!!! nobody seems to understand this. equally no one seems to understand that "shareholders" are, in general,not private inestors but pension funds whose structures are the same as big companies.the fund managers are on the remuneration cmtees of other companies and support the erronious view that eye-watering sums have to be paid for the best quality managers, these managers reciprocating at the fund managers reviews--geddit?salaries spiral out of control and morality- pigs/troughs,turkeys/xmas!!!! I only wish I knew where fred g was scavenging!!!