Jebus wept!

[url=http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8900863/Virgin-Money-used-Northern-Rock-cash-to-fund-deal.htmlNo subscription required[/url

People are saying banks are in a terrible position and the government did a wonderful deal to get £700+ million, so why are the bonuses for bankers this year over £4 billion then?

Let me get this straight, this is like buying a house with an acre of land attached, but before the contracts even signed you tell the seller that you can only afford to pay for the house and land if you sell the land first and use that money to pay the seller ?

There is something brilliantly corrupt about the whole thing that makes you think of a serpent swallowing its own tail.

Even Dick Turpin had the decency to wear a mask...

A nearer analogy is that we sold a house – which happened to have a safe in it, containing money – and the buyer is paying us (in part admittedly) with the money in the safe (the money that was ours, until we sold the house)

...or,

You buy something and pay 100% of the price by using 33% of the asset to pay for itself, leaving you with only 66%, and then you think you've got a bargain ?

Not only that but the seller thinks they got a bargain too because until they sold it to you they owned 200% of it.

I haven't just fallen down a rabbit hole have I ?

I'd be interested to see what exactly has been left on the Government balance sheet in this. Given that NRs main problem was its funding structure rather than its assets, I wouldn't have thought what the Government has been left with is actually that bad quality.

Anyway, if nothing else hopefully this is the start of increased competition in retail banking. I was in the Bank of England Museum the other day and it's frankly embarrassing how little has changed in retail banking in over 400 years. Most retail banking, on the customer facing side at least, is still stuck in the 90s and we need some innovation and competition to bring it kicking and screaming in to the 21st century. Branson is the sort of guy who might be able to kick start that.

Good luck to Osborne if he thinks he can now start getting out of his Lloyds and RBS positions anyway. He'll make some impressive losses closing those out if he tries.

Isn't that how most soccer clubs are financed?

In fact I've got an idea.

I should be able to tog you out with a decent Savile Row bespoke suit, Ede & Ravenscroft or Hilditch & Key shirt, a pair of Cheaney or Barkers and I've got some Canali ties knocking around to top it off. If we divvy up what loose change we've got and what we can find down the back of the sofa, we should be ablt to punt on the RBS or Lloyds giveaway. Might be a problem if we get invited to Mansion House though, I've only got one Kilgour, French & Stanbury white tie ensemble

Well I'm normally a strictly a jeans and rugby shirt (heavy cotton only) sort of bloke these days but you can introduce me as a Richard Branson sort of chap, tell you what I have got in the wardrobe though - a couple of Newcastle Falcons shirts with Northern Rock plastered all over the front of them - that'll help won't it ?

From what I remember of TV programmes made after Nthn Rocks demise three (four?) years ago their asset sheet was very healthy (being a traditional sort of building society) until they took on bank status and started trading in all sorts of pieces of American debt - from what I recall Nthn Rock were left holding the parcels when the music stopped, albeit that they still had a very "safe" side of the asset book left over from the good old days.

Don't tell me, let me guess which bit Branson walks away with and which bit we get stuffed with.

I don't know but I do know that in a drawer upstairs I have two building society account books, both with a few quid still "invested" in them.

One is Northern Rock and the other is Bradford & Bingley.

Form a queue if you want some more of my marvellous financial advice.

After the pensions fiasco? No ta

...and the ISA's, invest ten grand in ISA's and five years later get ten grand back, having had to wait five years for them to climb their way back to ten grand.

This time next year we'll all be millionaires...

Amazing, isn't it, how banks and building socs started offering traditional savings accounts, with an interest rate (albeit below current inflation, by and large) after 2008?

Before then, they'd been as rare as hens' teeth, and your only real 'savings' option was an investment ISA...

It was also around that time that NatWest stopped sending around their "Personal Financial Advisor", I think at that point even they had to own up to the fact that most "Financial Advice" is far better garnered from a ouija board, which is apparently how they had been doing it up until then.

They've confirmed that this year by selling the whole of their pensions division to Aviva, NatWest having apparently decided that they don't want to do investments any more, which begs the question, what the fook do they do ?

Banks are big businesses. Just because they are struggling overall doesn't mean that there aren't profitable areas where people are earning their bonuses.

That argument might work if the bonuses were paid only to those who are actually making the money, but what about the bonuses paid to senior directors, who oversee a net loss at these banks?

On a slight tangent the treasury have also sold off Northern Rock to an organisation whose parent company is doing its best to avoid paying the UK tax www.telegraph.co.uk/news/politic ... borne.html www.thisislondon.co.uk/standard- ... x-saver.do www.guardian.co.uk/business/2003 ... heobserver So if i follow earlier comments, we are seeing something akin to a known shoplifter called Dickie steeling goods from a shop, then selling the goods and and using some of the proceeds from that sale to pay the shopkeeper to keep quiet. The shopkeeper then goes around telling everyone what a wonderful person Dickie, and how he loves to do business with him. Dickie of course knows he is free to continue his shoplifting exploits, while using the ill gotten gains to fund a playboy lifestyle, which earns him the adoration of the ignorant masses who see only a debonair adventurer and not a robbing so and so.

On a slight tangent the treasury have also sold off Northern Rock to an organisation whose parent company is doing its best to avoid paying the UK tax www.telegraph.co.uk/news/politic ... borne.html www.thisislondon.co.uk/standard- ... x-saver.do www.guardian.co.uk/business/2003 ... heobserver So if i follow earlier comments, we are seeing something akin to a known shoplifter called Dickie steeling goods from a shop, then selling the goods and and using some of the proceeds from that sale to pay the shopkeeper to keep quiet. The shopkeeper then goes around telling everyone what a wonderful person Dickie, and how he loves to do business with him. Dickie of course knows he is free to continue his shoplifting exploits, while using the ill gotten gains to fund a playboy lifestyle, which earns him the adoration of the ignorant masses who see only a debonair adventurer and not a robbing so and so.

Whenever I'm in the queue at NatWest I pick up one of their leaflets promoting their 'financial advice' and laugh out loud and say mention in a loud voice that they'd be the last people any sane person would take advice from - given how they wrecked their own company and the nation's finances. The bare-faced cheek of them is staggering.

There was a time, not long ago, when Building Societies, Northern Rock included, were places where people could put their savings, nice and safe ... boring maybe ... but nice and safe.
The BS then lent those savings to people to buy houses.

But then some suit at Northern Rock saw a chance to make oodles more money by selling mortgages (and borrowing the money from other banks to cover the mortgages they were selling), then packaging the mortgage debt up and selling it off.
This was money for old rope and, as long as the money was there for borrowing, and in their keen-ness to profit even more, they ramped it up and ramped it up until, when the money supply dried up, they couldn't borrow any more, got caught in a very exposed position, and everything went t1ts up.

But despite the trail of devastation left behind, some people made a whole heap of money and lost nothing.
People with that kind of talent have to be paid a lot of money or they might go abroad ... and we wouldn't want that now would we?

These people have little talent - they're just managers.

Indeed, I think the argument about scouring the world for top talent and having to pay global rates for it falls down because the vast majority of the biggest UK listed companies (often global enterprises) have British boards. Now of course British people could be the best in the world but the evidence from other "highly competitive" fields (notably football, but also rugby, tennis, etc, etc) suggests otherwise!

There are two key elements to that change:

1) demutualisation, which saw building societies convert to ordinary limited liability companies, responsible to the share market which demanded increased and increasing profit rates (or they'd suddenly halve the value of your company by driving down the share price)

2) a legislative change which allowed building societies to become banks and indulge in the other financial 'services' that banks do - such as playing with financial derivatives, or "borrowing the money from other banks to cover the mortgages they were selling, then packaging the mortgage debt up and selling it off."