A Newly Spun Plan For Northern Rock

The UK Treasury, ever keen to help out its former/current leader, Mr G. Brown, is today alleged to be looking at a sale of Northern Rock by the end of this year; just to show how right the Government has been in this crisis.

I doubt this will happen as the current sunny uplands of green shoots are going to get a rough ride when we come round to September/October again, if not before.

Also, what is Northern Rock now? 50 high street stores, a current account and savings business and a £100 billion mortgage book of dodgy interest only mortgages. Plus the Government has sunk £3 billion into the beast to maintain its capital.

Then there is the work out of the funding structure Granite and the fact that the Government wants to use the Rock to encourage more lending to residential mortgage market. No one will buy this at a good price and half the banks in the UK won’t be allowed to for competition reasons in any event.

Instead there will be a ’spin’ operation:

*Northern Wreck will be stripped of all toxic assets that will be lumped elsewhere in UKFI (the Government vehicle).

*Only the savings and ‘good’ mortgage book (what is left of them, most of these mortgagees have been pushed to refinance elsewhere and the money used to repay the £25 billion loan, did I mention the Rock still owes another £8 billion).

*Accounting trickery will be used to show most of the Government money is repaid or converted in bonds or some such mechanism.

*A willing buyer, like Virgin Money, will be found and will pay a sum of money that can then magically be shown to have made a profit, say £1 billion or so for the taxpayer.

Champers all round for the Socialists who have outsmarted the Capitalists!

(N.B Event not to be held in the same room in the treasury where the hidden losses and toxic assets are to be left to quietly rot away, out of sight and mind of the voters)

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