Time For Pay Back?

Just when we thought it was one way traffic and all the money was flying out of our pockets, the news is that Northern Rock will probably be sold later this year and we can get some of those £ billions paid back committed on our behalf.

Well, it won't actually work like that. You see, Northern Rock will be split into two before such a sale occurs. One half will be a pristine looking, well financed company with lots of new customers going to it and probably sold for around £2 billion which will constitute a net loss to the taxpayer of around £1 billion (oh, and that's a good thing, by the way, as the original forecast was to lose £1.3 billion).

The other half of the bank will be the 'Bad Bank' full of those stinky toxic debts and our erstwhile investment company, UKFI, who manage our portfolio of failed banks, are busily headhunting for a CEO for 'Bad Bank'. What a job that will be - doesn't matter how they do because the losses are so huge they surely cannot get any worse. Sure fire winner - I hear Fred Goodwin is available.

This suits the Government nicely as they can validly claim there is a way to exit all this manifest stupidity of buying into all the banks to save them. The fact that we make a 33% loss on the deal is neither here nor there, at least there was an end date.

Possible buyers for the 'Good Bank' are Virgin Money and National Australia Bank. You may remember that Virgin One had been one of the bidders at the time of NR's glorious failure but the Government rebuffed the idea to handle matters themselves. £90k per month later for Ron Sandler, £ millions on armies of consultants and several bonuses for staff for repaying some of the vast amount of money they owe and the very same company can buy the cleared up balance sheet for a song with no vast liabilities tied around their necks. We are left with all of those as we would hate to get rid of them.

So in summary - we buy a failed bank, pay millions in fees to do the obvious, sell the best part for way below what we paid for the whole lot, then be saddled with the real toxic debt worth £ billions. Super plan, must have been worth all the £ millions of advice paid to the investment back advisers for that one - I could have come up with it for the price a beer and packet of salt & vinegar.

It about sums up Alistair Darling - grade A pillock.