British to the core

[peterbirks]

Core Values, Stand up for British Values, Support schools and hospitals, stand up for you...

All phrases that, as usual, are inserted into gramattically correct sentences, and which mean absolutely nothing. Thanks Gordon.

It's incredible to think that Chris Morris produced a faux party political broadcast as part of On The Hour (or perhaps it was part of his GLR show) more than 15 years ago, and that current political speechwriters seem to have taken as their template.

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Northern Rock, eh? Cor, what a fuck-up! This is a bit like trying to sell a second-hand car that no dealer is interested in. "Nah mate, couldn't sell it for a fiver if I took it off your hands, not even if I broke it up for scrap".

The standard response is, of course, "I wouldn't start from here". Carrying on "as is" is an impossibility, because the rates that it is paying to BoE for funding are higher than the rates it is charging its borrowers. Eventually the capital will run out. And the buyers (or, rather, non-buyers) know this. Perhaps that offer of 100p a share, so derided when made a few weks ago, might turn out to be bigger than the final offer. Which, in true Godfather II terms, could turn out to be "Nothing."

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Comments

Trading out

[geoffchall.livejournal.com]

I'm puzzled as to why this needs to be such a train and buffers situation. Why don't NR just let their SVR drift up a little to reflect their borrowing costs now it's the BoE that will be lending them money at some point soon?

They would stand to address their margin situation and the punters would wither away by shoving off to other lenders. But this isn't a bad thing for NR. They have net assets and if everyone repaid their mortgages and NR gave back all the account-holders' money and other loans, there would be a sizeable pot of cash and property. NR is worth that much, divided by the shares in circulation, less the cost of shrinking the firm to a small head-office staff of 3 people.

Re: Trading out

[peterbirks.livejournal.com]

That does seem to be a logical economic solution -- heading into "run-off" as it were. As the FT observed, it's doubtful that the people currently there are capable of doing it, and while there are a number of insurance operations that specialize in run-off, it's rather new territory for the banking system.

Unfrtunately, as the FT observed this morning, there aren't really enough talented people around who can be parachuted in at short notice to implement such a plan.

However, the equity market, being what it is, would presumably mark the share price down to "expected assets at close" (a difficult actuarial assessment, in truth), and my guess would be that you wouldn't be looking at more than 60p to 80p per share. For the equity holders, it really is a bit of a buffers situation, I suspect.

And what about the PR implications? Would borrowers take this "gradual drift up" in the SVR lying down? I know you could say "just go to another lender", but, remember, the Rock was lending at levels which HBoS declined. For some of these borrowes, moving elsewhere might not be an option.

That brings you back to politics again.

PJ

Re: Trading out

[(Anonymous)]

Goldman's or another leading bank could very easily put a team in place who could achieve this. Of course they'd earn a generous fee and do so in a brutally hard-nosed manner. Cue tabloid headlines about rich bankers profiting at the expense of the little guys.

Incidentally can someone explain why that smug baldie Adam Applegarth is still in a job? Dividend withheld today - not cancelled, oh no, deferred. Hmm. I wouldnt be holding my breath for that one to arrive if I were a shareholder. They still seem to be in denial if they can make that decision with a straight face.

matt

Re: Trading out

[peterbirks.livejournal.com]

I agree, "Denial" is an excellent term, and is one reason why the current team couldn't fo the recommended job.

Not just Goldman or the likes could go in there. KPMG, PwC or Ernst & Young would also be fine, but that brings us to the dreaded term "administration", and that, as far as the papers are concerned, is "failure". It isn't necessarily so, as we know (although, in truth, the term is often used when 'bankrupt' would be a better word) and administration would be just about the most logical solution. But the politics are unenviable in that case.

BoE must be praying for the credit crunch to fade away and for Lloyds TSB to quietly agree to take if off the BoE's hands. Here we actually enter a kind of Bill Purle situation, in that Lloyds could offer less than the asset value, solely because the "liquidate for asset value" option is politically untenable. Screwing the shareholders is fine, so long as it is not actually called a "failed bank".

And, of course, let's not go down the route of a property price collapse. Where would N Rock be then? Insolvency City, Arizona, that's where.

PJ

[jellymillion.livejournal.com]

Don't forget "talent": purest wibble

[peterbirks.livejournal.com]

Talent, skills set, willingness to work hard to achieve our aims, deserved aspirations, go foward together, a country as one, for the future, for our children, and for our children's children, we will win, we must win. Vote now, Vote Us, Vote a better Britain. I thank you.

PJ

[andy-ward-uk.livejournal.com]

Willingness to work hard, that one always gets me. It never seems to occur to anyone that if we managed to meet all our needs without anyone working hard, that would be good.

[jellymillion.livejournal.com]

We got an all-staff email today, announcing the start of the annual "performance management" appraisal and objective-setting exercise. One particular highlight of this ridiculous nonsense was the intention to "raise the bar" for me and my team. Why on earth should I want to do that? Why would anyone think I would? Why can we not operate on the basis that I do what I think is appropriate, sufficient and necessary and they tell me if they're not happy. Then I leave if I'm not prepared to change. Seems simple enough and we don't have to faff about with "career management". Ho hum.

[jellymillion.livejournal.com]

OK, I'm convinced by your barrage of buzzwords.

I will vote for Us. Just as soon as I figure out which party is Us.

Rocks and Northern Places

[(Anonymous)]

But I am voting US ... oh, I see what you're getting at. I'm also voting for a better Britain, ie one without me in it.

I'm just a humble techie, and I know nothing of this financial lark (as Socrates would say), but this multi-threaded conversation seems to move around two poles.

At one end, we have the Accountancy pole, as exemplified by Geoff. (And possibly, but from a different perspective, Mike.) At the other (Financial Engineering) end, we apparently have everybody else.

I don't really understand the details, since SVR to me means either (a) the Severn Valley Railway or (b) the official successor of Soviet foreign intelligence agencies or (c) the wonderful Flemish Stichting Frije Recreatie -- and standing around for fun sounds just my sort of thing -- or (d)Syniverse Holdings, Inc (who appear to be drifting down all on their own) or (e) the University of Cambridge Engineering Department, which is at last something I can personally relate to.

No, I still don't know what it means. Standard something Rate? I really must rush out, crucify myself, and buy a house, just so I can get in touch with what the young folk are talking about these days. Fuck Punk: Hedge Funds are the new Men in Black.

However.

Geoff's approach seems eminently sane, if you live in the world of EBITDA and pricing by book value over number of shares. Which, surely, you should do. Unfortunately, perhaps, Geoff, being an accountant and boring and reasonable and sane, has a badly-skewed view on what's going on during the current fools' market. (Not that I have a better one. Faute de mieux, I trust Geoff.)

The opposite pole, which is that NR shares are worth fuck all on the perfectly reasonable principle that nobody would touch them (with the exception of one high-visibility speculator, obviously) with a pointy stick, is equally reasonable.

It seems to me that Geoff's position is the less insane, follow-the-bleating-herd, "Oh look, there's no forward business because there's no brand and where's all the goodwill gone," view on the matter.

There are indeed people out there who will snap NR up at the right price. They don't even have to be banks. Last time I did a back-of-the-envelope calculation, the thing has a market price of, what, £1 billion? (I just checked and it's nearer £700 million).

Fuck me, my lifetime enemy Luke Johnson could scrape the pocket change out of his discarded Marks and Sparks suits to leverage this one.

But is the book good enough? Is the cash-flow haemorrhage containable?

Bear in mind two things: one positive and one negative.

On the positive side, the Brown administration is going to twist itself into a self-salting pretzel to help out and to provide what Matt would call "goodwill" later on. Cue rolled up trouser legs and funny handshakes.

On the negative side, whoever buys this sodden piece of flotsam and jetsam will have to deal with the 15% charitable fund poison pill. Which we haven't heard too much of. But I think we will.

Oh, and trust me. I'm golden on this one. Lloyd's won't buy it. They're terminal wusses. Basically, they're so thight-arsed that you couldn't squeeze a gnat's pubic hair up there with a tweezer.

No, given the teensy little general liquidity problem, I'm now betting on The Man from the Du(bai) to grab value at maybe £1.15 to £1.20. If this does indeed make sense, then there'll be some stalking horses along the way.

Fox Newsflash! Chris Morris to be Karl Rowe's 2008 Replacement

[(Anonymous)]

I'll sing you thirteen -O!
Red Fly The Banners, O!
What are your thirteen - O!
Thirteen for the holes in Trotsky's head.
Twelve for the chimes on the Kremlin clock
And eleven for the Moscow Dynamos
Ten for the Days that Shook the World
And Nine for the Days of the General Strike
Eight for the hours of the working day
Seven for the Seventh World Congress
Six for the Tolpuddle Martyrs,
Five for the years in Stalin's plans
And four for the four years taken,
Three, three, the Rights of Man!
Two, two the workers' hands, working for a living, O!
One is Workers' Unity and ever more shall be so.

Now, That's self-delusional crap for you. But it sings well (and I've got the lack of an arrest by an Oxford policeman at 1:00am to prove it) and it means something.

I was never too sure about the numeracy, though. You might have to swap eight for seven (at least in France) these days, and I'm damn sure there were more than six deaths on St Peter's Field. But I'm too lazy too look it up.

Apparently La Granita Brune was also too lazy to write an actual speech.

Res ipsa loquitur, O tempora O mores, γνώθε σεαυτόν, that sort of stuff.

650 channels, and nothing on.

Re: Fox Newsflash! Chris Morris to be Karl Rowe's 2008 Replacement

[peterbirks.livejournal.com]

Oh God, he's discovered how to get Greek into his posts. Now we are all lost.

PJ