Vince Cable was right - Northern Rock about to be Nationalised

Seconded.... he sounded a first class gentleman.. not driven by ambition and image. In fact he came across as trustworthy!...or is that going too far for a politician?

Well, I was being provocative, as I'm sure you realise, however I would agree with you that he has an effective presentation, probably without the spin machine which we all suspect some others have.

John

The other solution is to pay off the depositors - possibly by paying another bank to take on their accounts, and shut the company down.

I really don't see why Northern Rock is of such strategic importance that it has to be saved at all costs, and certainly not at a cost that is 20% higher than the current market capitalisation of the Royal Bank of Scotland.

I agree - after all the negative publicity everyone and their dog knows that they can only continue operating due to the largess of the BoE. I believe that they have assets in excess of liabilities, they just have fatally bad cashflow problems. Receivership seems like a perfectly reasonable option.

Daytona

Thirded

No, please read a basic guide to expressing emotions through a text medium for the reason why.

Daytona

I have just seen on the news the (mainly elderly) people complain that they have lost their savings. When they say "savings" - they of course mean the money which they invested in NR shares. Were they not aware of the fact that the value of shares fluctuates.

I look forward to the NR being nationalised - and hopefully the institutional investors who have bought in recently in order to make a killing will get their just deserts.

I think quite a lot of them didn't invest, they were windfall shares. Judging by some of the comments on the BBC website, I think each person got 500 shares (possibly 1000 for some?)

Initially traded in October 97 at about 450p

And, assuming I've added the numbers up correctly (probably not :-) they'll have had 199.5p dividends (net and not counting the cancelled dividend)

If we assumed 6% interest p.a. in a bank 2250GBP would be worth about

4000 now. Making the approximation that all the dividends were paid in 2002 then the dividends (inc tax) would be worth 1500GBP if paid into the same bank. The shares are still at 60p today (300GBP) and could easily have been sold for 150p (750GBP) even after the problems became apparent.

So the windfall recipients have still got about 2k in todays money from their windfall rather than about 4k if they'd sold their NR shares immediately and paid the money into a high interest account.

(All my calculations above are rough and ready. In particular I've ignored tax which can significantly affect the compounding I've assumed)

Tim.

Yes, yes, along with all the others who predicted precisely the same outcome.