delusionofgrandeur

Northern Rock, the troubled UK subprime lender who all but collapsed at the end of last year now looks like rather likely to be nationalised.

Northern Rock was bailed out by the Bank of England and the Treasury (aka the taxpayers) in September after a very public run on the bank.

The UK taxpayer is now exposed by about £55,000,000,000 (£55billion) or around £1,800 per taxpayer. This exposure was supposedly secured against the mortgage securities which Northern Rock owned. Only it turned out that Northern Rock didn’t actually own £53 billion worth of the securities which had been transferred to an offshore company wittily name ‘Granite’.

Now we hear that the government has lined up one Mr Ron Sandler, former head of Lloyds Insurance Market as the new prospective chief of Northern Rock “should the bank be nationalised”. This suggests to me that the sale of the bank is not now viable (if it ever was) and the bank will be nationalised. If this is the case, as far as I know, Northern Rock’s share value would be written off and the taxpayer would be left exposed to the massive liabilities Northern Rock has run up.

Photo Credit: Alex Gunningham cc-by-2.0

This entry was posted on Saturday, January 12th, 2008 at 3:33 pm and is filed under Economy, Fantasy House Prices, Politics.You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.