I see in the light of the nationalisation announcement, that the largest shareholders Monaco-based hedge fund SRM are considering a legal challenge.
In my opinion they can just f*ck off.
When did they buy their shares, why did they buy their shares, were they hoping to make a killing - well tough shit, did they not realise that the value of shares may go down as well as up,
What would be the basis of the legal challenge?
Probably that it's illegal under EU anti-competition laws for a state to subsidise a commercial enterprise, thereby unfairly enhancing its competitive position.
If direct specific Government action has confiscated/deprived them of property, then as a matter of course, compensation would be necessary. This principle goes back a thousand years, and was (generously) honoured in the nationalisations carried out after the war. The Government is not responsible for the collapse in share price over the last six months. But a market value at the point of nationalisation is not unreasonable.
When you put your money on a horse, you can win and you can lose. But if half way around the track, the police came and stopped the race, shot your horse in the head, and then reran the race, you would be hoping for more then a 'f*ck off'.
Gaz
Except that most certainly doesn't apply in this case as the horse had already died half-way round the track. If the taxpayer had not stepped in the shares would have been worth nothing anyway as the bank would have gone bust.
I suppose the only way you could value it is by what Virgin was offering to pay as they seemed the front runner. But that offer in itself was heavily sweetened by the government by offering lots of support so is inflated over the true market value.
They made a bad/unlucky call - it's all part of investing.
and why did the Monaco-based hedge fund SRM buy shares in Northern Rock?
Was it to save jobs? Was it to ensure that all depositors would not lose anything? Was it to help out the Government? Were they just wanting to be a good fairy?
No it was to make a quick buck - which would necessarily be at someone else's expense.
I repeat : In my opinion they can just f*ck off.
Sell it off...
A cleaner solution would be to wind Northern Rock down, sell off its assets (which still seem sound) when conditions allow, and get the taxpayers' money back that way.
Absolutely. In fact it was givernment dithering that brought this situation about. Months ago this was brewing. The government should have made it clear then that the price for guaranteeing deposits would be loss of control and a winding down operation, ie sell off the loan book, close the branches, etc. With only that for a bail out, the directors would have sharpened their pencils a long time ago. I hope other similarly affected lenders have had this made clear.
Rusty
You seem to be unable to realise why your path is the path to tyranny. People must be compensated for confiscations by the State (not for the fall in the share price) their motive or otherwise behind buying up shares is of no real concern. Do grow up a bit.
Gaz
Totally agree.
...and we don't want that...
Which is what the government tried to do but - as you would expect with a stricken bank that relies almost solely on the wholesale money markets in a credit crunch - no one is offering very much. This makes it such a bad deal for the tax payer (i.e. the government would loose even more money) that they have decided to keep it and run it.
This is a potential nightmare problem for the government.
The problem can only be prevented going forwards by the FSA ensuring that all banks have balanced funding.
Whatever next - having to check that banks have balanced funding - what is Britain turning into I wonder?
Oh absolutely. You cannot have the government just take things from people as this is indeed tyranny.
If the government does indeed pay the shareholders nothing - it is no different from what they would have received had the government not stepped in as the bank would have gone bust. The limited interest from just 2 bidders is driven by government commitments to maintain this support at least over the next 3 years.
You seem to misunderstand the role of shareholders. They own the business. They (re-)appoint the directors. When it all goes wrong, you should put it right. The shareholders should have coughed up any cash needed (leaving the govt and tax-payer out of it).
You collectively chose not to do that, preferring to hide behind limited liability. So the govt stepped in, not to protect shareholders who had failed to act properly, but to protect NR's customers.
Your claim now that the shares still have some value is conveniently to ignore that their only value comes purely from HMG's involvement.
Well, that may be, they may have recieved nothing, it may have gone bust. The point is, it didnt. They took it over, now they need to compensate.
The limited interest from
Gaz
And made a bigger mess. Most frigtening words in the English language "We're from the Government, and we are here to help".
That is possibly so. That is the pill you have to swallow. If you confiscate someones goods, you become responsible for compensating them. The good people meeting at Runnymede eight hundred years ago managed to understand this, why cant you?
Gaz
They should compensate them on the current value of the shares.
Should that be based on what the current value would be if they were not involved and supporting NR with the taxpayers money?
"Sam Smith" wrote
Yep. That's greater-than-zero.
A cleaner solution would be to wind Northern Rock down, sell off its assets (which still seem sound) when conditions allow, and get the taxpayers' money back that way.
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The problem is there are currently no buyers for the assets. NR only went under in the first place because it was unable to securitize its mortgage book, and none of the offers for the company as a 'going' concern were willing to take on these loans in the short term.
tim
yeah, 20p greater than zero, hardly close to the 450p claimed to be expected
tim
You mean zero?
"Sam Smith" wrote
No, that would be greater-than-zero too.
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