More massive losses at taxpayer owned Northern Rock now in breach of regulatory requirements

July 2nd, 2009 by stacyherbert

Stacy Summary: Wonder if Tesco still interested in buying the Northern Rock turkey?  The other thing about these headlines is that the state of the UK economy and infrastructure are in a bigger state of disaster than the US and most of my friends in UK have far more debt and lower income than my US friends.  I really can’t believe that we aren’t seeing the same levels of bankruptcy and homelessness as we see in US at the moment.  I suppose it is that there is a bigger public safety net in UK?

Analysts calculated that, to be in breach, the bank must have lost more than £500m in the past six months alone. Last year, Northern Rock made a £1.36bn loss after £1.15bn of bad debts. In December, a third of its £67bn mortgage book was in negative equity.

Despite breaking the rules, the FSA is letting the bank continue to write new mortgages and take deposits. Northern Rock is planning a capital restructuring that requires European state aid clearance and the regulator has agreed that “it does not currently intend to restrict the activities while the plan is implemented”.

Tags:   · · 3 Comments

3 responses so far ↓

  • Max Power
    Jul 2, 2009 at 1:55 am

    Don’t forget that NZ and the UK have had somewhat similar experiences when it comes to Public vs Private long distance rail networks.

    In the current incarnation, NZ railroads are all public — but 5 years ago they where all private.

    However, the expansiveness of NZ Rail that existed before 1950 is gone — both North Island and South Island.

    NZ Rail (technically called Kiwirail) in order to be fit for 21 century demands (namely “Peak Oil” coming more and more into play) needs to be brought up to code (track, bridges, etc…) and electrified.

    However, this upgrading may only happen in the depths of this probable 10 to 20 year depression.

  • Palantíre
    Jul 2, 2009 at 4:04 am

    Off topic news but I thought it was an interesting read, “Saddam’s weapons bluff aimed at Iran – FBI reports”
    http://www.reuters.com/article/middleeastCrisis/idUSN02534163

    Also, The Swedish Riksbanken lowered the key interest rate Thursday by 0.25 percent to 0.25 percent. But the interesting bit is this: Riksbanken also lowers lending rates overnight to minus 0.25 percent, from zero interest rates. This means that it costs to invest overnight at Riksbanken. “Keep the money in the system, and lend it out”
    no English link sorry
    http://www.dn.no/forsiden/utenriks/article1698975.ece

  • J
    Jul 8, 2009 at 5:11 pm

    On the safety net – yes. Why unemployment isn’t higher? There’s a tendency for employers to negotiate pay cuts with unions rather than have job losses – this might be a factor, but unemployment and underemployment is creeping up.

    What’s quite sickening is that we’re being told it’s necessary to cut government spending drastically – so we can repay the debt taken out to rescue the banks. Meanwhile these mostly nationalised banks haven’t resumed lending to pre-crunch levels – on top of which the government wants banks to hold onto more capital, which is kind of shutting the stable door after the horse has bolted.