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Is Northern Rock a busted flush?

The announcement that Northern Rock made losses of £725 million in the first six months of the year has caused significant concern amongst analysts and taxpayers. When you compare this against yesterday's impressive figures from Barclays bank and HSBC it really does put the situation with regards Northern Rock in perspective. So will taxpayers ever receive a return on their money?



One of the major concerns with regards to today's announcement is the fact that the UK government had effectively been talking up the business for some time. Then suddenly to have the rug pulled from underneath taxpayers in such dramatic fashion has not gone down well in political circles and taxpayer circles. Quite how the UK government could get it so wrong in the short term is a mystery and while the Treasury still insists that the business will make money in the longer term and taxpayers will not lose out, there is still the fact that significant money is tied up.



Those who have followed the Northern Rock debacle will be aware that the company effectively gave away its stronger mortgages by incentivising customers to go elsewhere, leaving the bank with the rump. Then more recently the management of Northern Rock decided to step back into the mortgage market and offer competitive mortgage rates although large deposits were required. It is this lack of direction which is causing most concern.

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