Is Northern Rock a viable business?
While there was a very strong argument as to why the UK government initially stepped in to save Northern Rock from collapse, i.e. saving the overall banking system from collapse, many people are starting to wonder if it is actually a viable business. Despite suggestions in the press that the company was ahead of schedule with regards to the repayment of substantial taxpayer subsidies, it appears now that with the company set to be split into two, further significant taxpayer subsidies will be required.
When you bear in mind the initial bailout cost was something in the region of £25 billion, and many expect a further £3 billion to be supplied from taxpayer funds, should the business not be sold on as a going concern rather than split into two?
The idea that the business will be split into something resembling a traditional bank and a mortgage provider will inevitably see one operation dominated by potentially bad mortgage loans and the other saddled with potentially bad personal loans. Would it not be sensible to either sell on the business as it is now or ask other banking groups to bid for different areas of the operation?
The UK government certainly has many questions to answer with regards to Northern Rock and its future.
Share this..
Related stories
MPs mortgage claims under scrutiny
A number of MPs will this week be receiving further correspondence from the Parliamentary auditor Sir Thomas Legg with regards to mortgage claims, both recent and in the past. It would appear that a number of claims were put through by the expenses office without due correspondence and evidence held on file which has caused controversy and a need to clarify the situation.
There are...
Has the property sector bottomed out?
As the news that UK house builder Galliford Try is planning to raise around £120 million through a fundraising, to fund the acquisition of land in the short to medium term, there is growing confidence that the UK property sector has a much firmer base going forward. While this particular fundraising is at a significant discount to the prevailing share price, in an attempt to assure its success, t...
Read MoreBanking sector set to move back into the black
With HSBC and Barclays bank set to kick off the bank reporting season we are hearing rumours that both of these companies will report impressive figures and a return to the black. However, as we covered in one of our recent articles, there is some debate as to how best the banks should tackle the ongoing situation in the UK. Do they come out with excessively upbeat statements, and try to kick UK c...
Read MoreRyanair pulls out of deal with Boeing
Budget airline Ryanair has today revealed it has pulled out of talks with aircraft giant Boeing after the pair were in discussions about a potential 200 aircraft order. While the company has suggested talks ended because the pricing or contractual terms conditions were not to its liking, it is common knowledge that the UK industry is struggling and literally every penny will count in the weeks and...
Read MoreAre we approaching the darkest hours before the dawn?
Over the last few weeks we have seen comments regarding the UK economy issued by various parties and various experts, each of which seems to have a different understanding and different appreciation of the current environment. Many believe the UK economy has turned a corner and is on the way to recovery while others believe it is stagnating and set for a fall in the short to medium term.