Question Why did we sell Northern Rock at a loss?

[rynnor]

We could have held it longer and made no loss or even a profit so why on earth did we sell it now while its value is depressed?

Its not as stupid or costly as the Brown flogging the gold gaffe but I cant help but wonder why it was done - backhanders?

 

[Corran]

Maybe they think that they never can get the money back because we paid way more then should have, a value that could never be realised. Given that it is our government they probably paid in 3 times what was worth!

 

[ECA]

Imo the economy isn't going to do much in the next few years, so if by waiting five years we get an extra £100m, then it wasn't worth it compared to getting the money now.

 

[old.user4556]

We could have held it longer and made no loss or even a profit so why on earth did we sell it now while its value is depressed?

Its not as stupid or costly as the Brown flogging the gold gaffe but I cant help but wonder why it was done - backhanders?

Have you not heard about the eurozone problems? Have you seen banking stocks of late?

In order to get a decent return on Northern Rock, it was sell now or hang on to it for a very long time. The other consideration is that Virgin Money and Tesco Bank are relatively new to the financial market with an appetite to snap up one of the other bank bits being sold under the Verde programme.

Northern Rock may never be worth what the tax payer pumped in, they had a buyer now and appeared to take the opportunity.

 

[old.user4556]

Imo the economy isn't going to do much in the next few years, so if by waiting five years we get an extra £100m, then it wasn't worth it compared to getting the money now.

Pretty much what I'm getting at .

 

[rynnor]

But by selling it they have realised the loss - why hurry to sell it at the bottom of the market - the amount it went for is not significant to our finances?

I think it was more an idealogical decision because tories dont feel right owning a nationalised bank.

 

[Gumbo]

They haven't sold at the bottom of the market, probably not even half way down.

ECA and G have it bang on right. Get what you can in now, or wait 10+ years.

 

[old.user4556]

Someone wants to buy it today, it's in fashion to sell off bits of banks just now, it may not be so easy or cheap (affordable?) if it's value went up to what it once was.

 

[Embattle]

Have you not heard about the eurozone problems? Have you seen banking stocks of late?

In order to get a decent return on Northern Rock, it was sell now or hang on to it for a very long time. The other consideration is that Virgin Money and Tesco Bank are relatively new to the financial market with an appetite to snap up one of the other bank bits being sold under the Verde programme.

Northern Rock may never be worth what the tax payer pumped in, they had a buyer now and appeared to take the opportunity.

That is more likely to affect the bad bit of NR which is still owned by the government, although having said that I do genenrally agree that selling the good bit is probably wise since it too is only likely to cost more in the next 10 years.

 

[Wij]

Have you not heard about the eurozone problems? Have you seen banking stocks of late?

In order to get a decent return on Northern Rock, it was sell now or hang on to it for a very long time. The other consideration is that Virgin Money and Tesco Bank are relatively new to the financial market with an appetite to snap up one of the other bank bits being sold under the Verde programme.

Northern Rock may never be worth what the tax payer pumped in, they had a buyer now and appeared to take the opportunity.

This

 

[MYstIC G]

They haven't sold at the bottom of the market, probably not even half way down.

ECA and G have it bang on right. Get what you can in now, or wait 10+ years.

With the minor extra point that you've got zero guarantee that it will be worth more in 10 years

 

[DaGaffer]

UK Gov have actually been trying to return NR back to the private sector for the last two years; this was the best offer they've had. Nationalisation was always flagged as a temporary measure anyway. Fact is, its very unlikely they'd make a profit on NR for at least a decade.

 

[Tom]

Virgin didn't buy it to make a loss, they'll be paying tax on the profit they make from it. Plus, the UK has just managed to offload some of its debt, which makes it less of a liability to lenders.

Also, AFAIK, the government still has the "bad" part of Northern Rock - those mortgages should be repaid in future, leading to an eventual profit.