Mervyn King, the Governor of the Bank of England, issued a warning in terms that only a seasoned Bank of England could, that the economy is heading for a very rough patch.
He was addressing the Treasury Select Committee and warned of "rather uncomfortable" times ahead, with a "big risk" that the credit squeeze could intensify.
Whilst these warnings if used by mere mortals may not seem to be that dire, to emanate from the mouth of the Governor they are very serious indeed.
As I have noted earlier, it is fear that is the key feature of this "crisis". King said that "sheer uncertainty", and fear of what lies ahead was driving wholesale interest rates back up to levels seen at the height of the summer credit crises.
Mr King said:
"In recent months, the near-term outlook for both inflation and growth has become less benign.
For the UK, the consequences of are difficult to assess and are likely to be evident first in the housing and commercial property markets."
The Monetary Policy Committee (MPC) meets next Thursday. The question is will they lower interest rates?
There are many debt burdened consumers and mortgage holders who are hoping for an early Christmas present from the MPC.
Friday, November 30, 2007
Thursday, November 29, 2007
Crisis Has Further To Run
David Blanchflower, the Bank of England Monetary Policy Committee (MPC) member, has stated that credit crisis that is damaging the UK economy and housing market has further to run, and that banks' losses could be much greater than currently estimated.
Quote:
"There is still concern in the credit market."
In a less than cheery pre Christmas interview with the Birmingham Post, he indicated that worse is to come.
As such he is calling or an early interest rate cut, and is supported in that call by Sir John Gieve another member of the MPC. Given that the MPC consists of 9 members, it just requires 3 more to bring about a much needed reduction in rates.
The question is will they have the vision to do this?
Quote:
"There is still concern in the credit market."
In a less than cheery pre Christmas interview with the Birmingham Post, he indicated that worse is to come.
As such he is calling or an early interest rate cut, and is supported in that call by Sir John Gieve another member of the MPC. Given that the MPC consists of 9 members, it just requires 3 more to bring about a much needed reduction in rates.
The question is will they have the vision to do this?
Wednesday, November 28, 2007
War is Declared
Whilst Northern Rock has been all but destroyed, in terms of value and reputation by the ambitions of those who once sat on its board, the shareholders do not intend to be thrown into the dustbin of history without a struggle.
Northern Rock's largest single shareholder John Wood's SRM Global hedge fund has increased its stake in order to oppose the board backed bid for Rock by Virgin, which many shareholders believes undervalues the company.
Virgin has received the explicit backing of Rock's board, and the muted backing of Chancellor Alistair Darling. However, the two largest shareholders SRM and RAB Capital reportedly prefer a rival bid from Luqman Arnold's Olivant group.
What is rather strange in all of this is the fact that the board of Rock have not even given the rival bid any consideration.
Some are concerned that undue pressure is being applied by Darling to the board to make this problem go away as quickly as possible, thus reducing the government's exposure to the ongoing fallout.
In effect, Rock has been quasi nationalised.
SRM are having none of this and now control 8.5% of the Bank, together with RAB Capital the rebel alliance of shareholders now control north of 15%.
However, Sir Richard Branson is no shrinking violet. He has upped the ante by taking out full page adverts in national newspapers, signed by him defending the bid.
War has been declared!
Northern Rock's largest single shareholder John Wood's SRM Global hedge fund has increased its stake in order to oppose the board backed bid for Rock by Virgin, which many shareholders believes undervalues the company.
Virgin has received the explicit backing of Rock's board, and the muted backing of Chancellor Alistair Darling. However, the two largest shareholders SRM and RAB Capital reportedly prefer a rival bid from Luqman Arnold's Olivant group.
What is rather strange in all of this is the fact that the board of Rock have not even given the rival bid any consideration.
Some are concerned that undue pressure is being applied by Darling to the board to make this problem go away as quickly as possible, thus reducing the government's exposure to the ongoing fallout.
In effect, Rock has been quasi nationalised.
SRM are having none of this and now control 8.5% of the Bank, together with RAB Capital the rebel alliance of shareholders now control north of 15%.
However, Sir Richard Branson is no shrinking violet. He has upped the ante by taking out full page adverts in national newspapers, signed by him defending the bid.
War has been declared!
Tuesday, November 27, 2007
Contact4
I wrote earlier this month about the plague of cold calls that I had been receiving from Contact4 who hide behind a variety of phone numbers (eg 08445560022, 08445560020 and 016131787000) in order to evade call blocking.
I had, at the time, raised a formal complaint with the Information Commissioner's Office (ICO).
I have now received a written response from the ICO. The ICO confirm that Cobntact4 has breached the requirements of the Privacy and Electronic Communications Regulations 2003.
So far so good!
The ICO then goes on to say that the Commissioner has no powers to punish an organisation for breach of the regulations, all that he can do is write to Contact4 reminding them of their obligations.
The ICO have written to Contact4.
Seemingly Contact4 have to continue to make a pain in the arse of themselves, before the ICO will pass on my complaint to the Regulatory Action Division.
Clearly this is not a system designed to help the individual complainant.
My question therefore is this:
What is the point of the regulations, the Commissioner and the ICO if they will not enforce the regulations?
I sent the ICO a link to this post today, together with the following questions:
"Thousands of people are being plagued on a daily basis by Contact4 (do a Google on them, or their phone numbers), why do you sit back and do nothing (ie merely write to them "reminding them of their obligations")?
What is the point of the regulations, the Commissioner and the ICO if they will not enforce the regulations?
Kind regards
Ken Frost"
I had, at the time, raised a formal complaint with the Information Commissioner's Office (ICO).
I have now received a written response from the ICO. The ICO confirm that Cobntact4 has breached the requirements of the Privacy and Electronic Communications Regulations 2003.
So far so good!
The ICO then goes on to say that the Commissioner has no powers to punish an organisation for breach of the regulations, all that he can do is write to Contact4 reminding them of their obligations.
The ICO have written to Contact4.
Seemingly Contact4 have to continue to make a pain in the arse of themselves, before the ICO will pass on my complaint to the Regulatory Action Division.
Clearly this is not a system designed to help the individual complainant.
My question therefore is this:
What is the point of the regulations, the Commissioner and the ICO if they will not enforce the regulations?
I sent the ICO a link to this post today, together with the following questions:
"Thousands of people are being plagued on a daily basis by Contact4 (do a Google on them, or their phone numbers), why do you sit back and do nothing (ie merely write to them "reminding them of their obligations")?
What is the point of the regulations, the Commissioner and the ICO if they will not enforce the regulations?
Kind regards
Ken Frost"
Monday, November 26, 2007
Northern Rock
Norther Rock shares initially fell by as much as 18% in early trading today. However, as at 9:15am they had risen by 53% on the back of the board's backing for the Virgin bid.
Northern Rock Chairman, Bryan Sanderson, said:
"A solution that firmly restores the company's prospects has been identified.
Furthermore our retail depositors can be fully reassured that the government has said it will ensure savers' money is safe whatever the outcome."
Source Bloomberg
Clearly I as talking bollocks yesterday, when I said that the shares would drop like a stone.
Northern Rock Chairman, Bryan Sanderson, said:
"A solution that firmly restores the company's prospects has been identified.
Furthermore our retail depositors can be fully reassured that the government has said it will ensure savers' money is safe whatever the outcome."
Source Bloomberg
Clearly I as talking bollocks yesterday, when I said that the shares would drop like a stone.
Sunday, November 25, 2007
Rock Shares Set To Collapse
I don't think it requires any skills in finance, or clairvoyance, to predict that Rock shares will fall through the floor tomorrow morning.
"A consortium led by Virgin Group plans to launch a deeply discounted share placing for Northern Rock that would value the beleaguered bank’s shares at less than half the current price.
Under the Virgin plan, Northern Rock's shares would be valued at between 20p and 40p. Virgin would inject a total of £1 billion in cash as well as its Virgin Money operation, worth between £200m and £300m, into the bank and take a controlling stake.
On Friday, Northern Rock's shares closed at 86p, valuing the bank at £361m. But the revelation of the discounted placing will put further pressure on the company's share price this week.
However, the Virgin proposal, which has financial backing from Royal Bank of Scotland and Citi, appears to have won support from the Northern Rock board. Virgin and the private-equity group JC Flowers are now the two front-runners to take control of the stricken mortgage bank. A preferred bidder could be announced within days."
Source The Times.
"A consortium led by Virgin Group plans to launch a deeply discounted share placing for Northern Rock that would value the beleaguered bank’s shares at less than half the current price.
Under the Virgin plan, Northern Rock's shares would be valued at between 20p and 40p. Virgin would inject a total of £1 billion in cash as well as its Virgin Money operation, worth between £200m and £300m, into the bank and take a controlling stake.
On Friday, Northern Rock's shares closed at 86p, valuing the bank at £361m. But the revelation of the discounted placing will put further pressure on the company's share price this week.
However, the Virgin proposal, which has financial backing from Royal Bank of Scotland and Citi, appears to have won support from the Northern Rock board. Virgin and the private-equity group JC Flowers are now the two front-runners to take control of the stricken mortgage bank. A preferred bidder could be announced within days."
Source The Times.
Saturday, November 24, 2007
HIP's
The government clearly has a desire to cripple the housing market, just at the point in time that it has already been dealt a severe blow by the credit crunch.
That can be the only explanation for the completely barmy idea announced this week of rolling out HIP's across all sizes and types of houses.
Utter folly!
That can be the only explanation for the completely barmy idea announced this week of rolling out HIP's across all sizes and types of houses.
Utter folly!
Thursday, November 22, 2007
HMRC's Staggering Incompetence II
It seems that our Prime Minister and Chancellor are not only guilty of setting up and running an incompetent organisation, but are also guilty of trying to blame a junior for the worse breach in security ever when in fact it was senior civil servants who were responsible.
Any government with such a cavalier attitude to security and the truth most certainly should not be entrusted with running the country.
The full story from The Independent is reproduced below:
The head of the National Audit Office, Sir John Bourn, locked horns with Her Majesty's Revenue and Customs and the Chancellor last night when he said the decision to post two computer discs containing the bank details of 7 million families was taken by senior HMRC officials and not, as Alistair Darling claimed, by a junior employee.
A public row broke out between the HMRC and the NAO over who was to blame for the blunder after Sir John launched a scathing attack on the former, saying high-ranking civil servants at the HMRC ordered the data – which the NAO had not requested – to be sent to his department. His comments contradicted Mr Darling's explanation to MPs on Tuesday.
The entire child benefit database was sent via internal mail by a junior official from HMRC in Washington, Tyne and Wear, to the NAO in London via courier TNT on 18 October.
Mr Darling said the civil servant broke the rules by downloading the data to computer disc and sending it by unrecorded delivery.
Edward Leigh, the Tory chairman of the Commons public accounts committee, said the NAO had asked only for basic details about child benefit recipients, without information on personal bank accounts, but was told by "high level" at the HMRC that it would be "too burdensome" to separate this data. He said he had been given a copy of a briefing note written by Sir John for the Chancellor, which suggested that senior HMRC officials authorised the release of the sensitive information.
The note says that the NAO requested data on child benefit claimants in a "desensitised" form, with bank accounts and other personal data removed, in March but an email from a senior business manager at HMRC stated that the data would not be desensitised.
Mr Leigh said the reason given for turning down the NAO's request was that desensitising information would require an extra payment to the HMRC data services provider EDS.
The disclosures will add weight to Tory claims that systemic failures at HMRC led to the worst loss of data in British history and cast doubts on the assurances by both Mr Darling and the Prime Minister that government bodies can be trusted to keep records safe.
It also raises suspicions that an office junior at the HMRC is being made a scapegoat for failures by more senior managers. That worker, who remains unnamed, was in hiding last night as the police search for the missing discs continued and the HMRC confirmed he was facing the sack. The man, who is understood to work in the IT department of the Child Benefit Agency, has been put up in a hotel with a minder to protect his identity as the clamour for his name to be published intensifies.
A spokeswoman for HMRC said: "His future is part of the investigation that is taking place. When that is completed disciplinary proceedings will follow. One of the outcomes of those proceedings is dismissal."
Senior civil servants are concerned that there should be no repeat of the public scrutiny and humiliation faced by Dr David Kelly, the government scientist who took his own life after he was exposed as a BBC journalist's source in the row over the "dodgy dossier" produced in the run-up to the Iraq war.
Mr Leigh's committee is launching an investigation into the lax data handling systems at the HMRC. It will summon Paul Gray, the department's former chairman who quit over the scandal on Tuesday, to answer MPs' questions.
Scotland Yard said officers from its specialist economic crime unit were helping to co-ordinate the investigation on Tyneside.A spokesman said: "Our inquiries will continue for the rest of the week."
It emerged yesterday that an almost identical breach rules governing the transfer of sensitive data took place in March. The NAO received discs from the Child Benefit Agency containing its full set of data on three occasions – yet none of its officials queried the decision to send out the data in an unfiltered form.
Any government with such a cavalier attitude to security and the truth most certainly should not be entrusted with running the country.
The full story from The Independent is reproduced below:
The head of the National Audit Office, Sir John Bourn, locked horns with Her Majesty's Revenue and Customs and the Chancellor last night when he said the decision to post two computer discs containing the bank details of 7 million families was taken by senior HMRC officials and not, as Alistair Darling claimed, by a junior employee.
A public row broke out between the HMRC and the NAO over who was to blame for the blunder after Sir John launched a scathing attack on the former, saying high-ranking civil servants at the HMRC ordered the data – which the NAO had not requested – to be sent to his department. His comments contradicted Mr Darling's explanation to MPs on Tuesday.
The entire child benefit database was sent via internal mail by a junior official from HMRC in Washington, Tyne and Wear, to the NAO in London via courier TNT on 18 October.
Mr Darling said the civil servant broke the rules by downloading the data to computer disc and sending it by unrecorded delivery.
Edward Leigh, the Tory chairman of the Commons public accounts committee, said the NAO had asked only for basic details about child benefit recipients, without information on personal bank accounts, but was told by "high level" at the HMRC that it would be "too burdensome" to separate this data. He said he had been given a copy of a briefing note written by Sir John for the Chancellor, which suggested that senior HMRC officials authorised the release of the sensitive information.
The note says that the NAO requested data on child benefit claimants in a "desensitised" form, with bank accounts and other personal data removed, in March but an email from a senior business manager at HMRC stated that the data would not be desensitised.
Mr Leigh said the reason given for turning down the NAO's request was that desensitising information would require an extra payment to the HMRC data services provider EDS.
The disclosures will add weight to Tory claims that systemic failures at HMRC led to the worst loss of data in British history and cast doubts on the assurances by both Mr Darling and the Prime Minister that government bodies can be trusted to keep records safe.
It also raises suspicions that an office junior at the HMRC is being made a scapegoat for failures by more senior managers. That worker, who remains unnamed, was in hiding last night as the police search for the missing discs continued and the HMRC confirmed he was facing the sack. The man, who is understood to work in the IT department of the Child Benefit Agency, has been put up in a hotel with a minder to protect his identity as the clamour for his name to be published intensifies.
A spokeswoman for HMRC said: "His future is part of the investigation that is taking place. When that is completed disciplinary proceedings will follow. One of the outcomes of those proceedings is dismissal."
Senior civil servants are concerned that there should be no repeat of the public scrutiny and humiliation faced by Dr David Kelly, the government scientist who took his own life after he was exposed as a BBC journalist's source in the row over the "dodgy dossier" produced in the run-up to the Iraq war.
Mr Leigh's committee is launching an investigation into the lax data handling systems at the HMRC. It will summon Paul Gray, the department's former chairman who quit over the scandal on Tuesday, to answer MPs' questions.
Scotland Yard said officers from its specialist economic crime unit were helping to co-ordinate the investigation on Tyneside.A spokesman said: "Our inquiries will continue for the rest of the week."
It emerged yesterday that an almost identical breach rules governing the transfer of sensitive data took place in March. The NAO received discs from the Child Benefit Agency containing its full set of data on three occasions – yet none of its officials queried the decision to send out the data in an unfiltered form.
Wednesday, November 21, 2007
HMRC's Staggering Incompetence
The HMRC and Treasury finds itself further in the mire today, as more details emerge about the colossal failures of security in respect of the loss of child benefit data.
Yesterday I wrote that 15 million people were affected, in fact the figure is a mind numbing 25 million.
The discs seemingly were only password protected, they should in fact have been encrypted. This means that the data will be very easy to access, and it is reasonable to assume that the underworld is now looking for these discs.
Security experts have lambasted HMRC for its incompetence.
Tom de Jongh, product manager at SafeBoot, said:
"Basic policies were ignored. It appears that the fundamental policies upon which the National Audit Office and HMRC operate are flawed and it is no wonder that this breach has occurred.
The Chancellor freely admits that NAO and HMRC broke clear procedures, but that will not reassure the millions of families that are praying their financial details don’t get into the wrong hands."
Brian Spector, general manager for content protection group at Workshare, said:
"It is staggering that an organisation responsible for the data of over 25 million child benefit claimants is still copying data onto CDs and not ensuring its full protection through encryption techniques.
It has never been acceptable for businesses or government departments to lose data, but in today’s information society, the flagrant disregard for the protection and security of this type of data is not acceptable.
The money invested in IT by the UK government must now be prioritised on security to ensure that the data of those the government serve – the public - is secure and protected."
Jamie Cowper, director of European marketing at PGP Corporation, said:
"These discs should never have been transported in the first place – information of this type should only be transmitted using the strongest security protocols available such as encrypted batch transfer – but more to the point, these details should not have been stored in this medium.
Discs are easy to lose, but difficult to protect. This type of information should only be stored on formats where the data can be encrypted transparently, so that it remains protected wherever it resides, and whether at rest or in motion."
An ex member of the HMRC spoke anonymously to the BBC:
"I wasn't surprised in the least when I heard the news. The problems with Child Benefit are only the tip of the iceberg.
Morale is non-existent. Mistakes happen continuously. Rooms full of unopened post are not uncommon.
Arbitrary individual hourly targets meant that people cut corners. It doesn't matter if you make mistakes because you won't be held accountable.
There is no trust between management and staff.
You are like a number. It is utterly demoralising.
I've spoken to some of my former colleagues about the Child Benefit blunder, and they are utterly apathetic. It's just one thing on top of another.
People hate it, but after 20 years or whatever they feel they can't get a job in the private sector.
Something like this was going to happen sooner or later."
The above is not only a damning indictment of HMRC but also an indictment that applies equally well to all other bodies in the public sector, and exposes the consequences of ten years of Brown's rule at the Treasury.
The damage he will do to the country as Prime Minister, were he to remain in office for that long, is mind boggling.
Yesterday I wrote that 15 million people were affected, in fact the figure is a mind numbing 25 million.
The discs seemingly were only password protected, they should in fact have been encrypted. This means that the data will be very easy to access, and it is reasonable to assume that the underworld is now looking for these discs.
Security experts have lambasted HMRC for its incompetence.
Tom de Jongh, product manager at SafeBoot, said:
"Basic policies were ignored. It appears that the fundamental policies upon which the National Audit Office and HMRC operate are flawed and it is no wonder that this breach has occurred.
The Chancellor freely admits that NAO and HMRC broke clear procedures, but that will not reassure the millions of families that are praying their financial details don’t get into the wrong hands."
Brian Spector, general manager for content protection group at Workshare, said:
"It is staggering that an organisation responsible for the data of over 25 million child benefit claimants is still copying data onto CDs and not ensuring its full protection through encryption techniques.
It has never been acceptable for businesses or government departments to lose data, but in today’s information society, the flagrant disregard for the protection and security of this type of data is not acceptable.
The money invested in IT by the UK government must now be prioritised on security to ensure that the data of those the government serve – the public - is secure and protected."
Jamie Cowper, director of European marketing at PGP Corporation, said:
"These discs should never have been transported in the first place – information of this type should only be transmitted using the strongest security protocols available such as encrypted batch transfer – but more to the point, these details should not have been stored in this medium.
Discs are easy to lose, but difficult to protect. This type of information should only be stored on formats where the data can be encrypted transparently, so that it remains protected wherever it resides, and whether at rest or in motion."
An ex member of the HMRC spoke anonymously to the BBC:
"I wasn't surprised in the least when I heard the news. The problems with Child Benefit are only the tip of the iceberg.
Morale is non-existent. Mistakes happen continuously. Rooms full of unopened post are not uncommon.
Arbitrary individual hourly targets meant that people cut corners. It doesn't matter if you make mistakes because you won't be held accountable.
There is no trust between management and staff.
You are like a number. It is utterly demoralising.
I've spoken to some of my former colleagues about the Child Benefit blunder, and they are utterly apathetic. It's just one thing on top of another.
People hate it, but after 20 years or whatever they feel they can't get a job in the private sector.
Something like this was going to happen sooner or later."
The above is not only a damning indictment of HMRC but also an indictment that applies equally well to all other bodies in the public sector, and exposes the consequences of ten years of Brown's rule at the Treasury.
The damage he will do to the country as Prime Minister, were he to remain in office for that long, is mind boggling.
Tuesday, November 20, 2007
HMRC Lose Data
Congratulations to HMRC who have succeeded in losing data relating to the child benefit records of 15 million people.
That's quite an achievement, even by HMRC standards of incompetence.
Chancellor Alistair Darling, who is having less than a pleasant week (what with the Northern Rock debacle etc), is making a statement to MPs.
The confidential details were contained on a computer disc, and is understood to have been lost in transit.
HMRC's chairman, Paul Gray, has resigned.
Seemingly the Treasury and government have known of this for the past ten days. One might ask why it is only now that they have chosen to share this knowledge with the rest of us.
The answer is simple, the news leaked.
Revenue and Customs claims that it does not think that the records (names, addresses, date of birth and bank accounts) have fallen into the wrong hands.
This statement is of course complete nonsense, given that they don't know where the records are. Quite why they assume that the public are so naive and gullible as to believe their reassurances is beyond me, and adds insult to injury.
The Metropolitan Police have confirmed they are "making inquiries" into the discs.
This is the same government that would have you believe that data stored on their beloved id cards would be safe in their hands!
That's quite an achievement, even by HMRC standards of incompetence.
Chancellor Alistair Darling, who is having less than a pleasant week (what with the Northern Rock debacle etc), is making a statement to MPs.
The confidential details were contained on a computer disc, and is understood to have been lost in transit.
HMRC's chairman, Paul Gray, has resigned.
Seemingly the Treasury and government have known of this for the past ten days. One might ask why it is only now that they have chosen to share this knowledge with the rest of us.
The answer is simple, the news leaked.
Revenue and Customs claims that it does not think that the records (names, addresses, date of birth and bank accounts) have fallen into the wrong hands.
This statement is of course complete nonsense, given that they don't know where the records are. Quite why they assume that the public are so naive and gullible as to believe their reassurances is beyond me, and adds insult to injury.
The Metropolitan Police have confirmed they are "making inquiries" into the discs.
This is the same government that would have you believe that data stored on their beloved id cards would be safe in their hands!
Northern Rock Suspened
Trading in Northern Rock shares was suspended for the fifth time in early session today, after the stock slumped more than 41%.
It has now resumed trading, and is currently down around 21% at around 82p.
Congratulations to the board of Northern Rock for destroying this once solid company with their high risk lending strategy. They have succeeded in consigning the company to the dustbin of history, in a similar manner to the board of Marconi.
The shares in Rock are now the plaything of the speculators and will see rises and falls over the coming days that will make some individuals very rich, but will be of no comfort to the long term shareholders who bought in when the stock was valued at over £12.
I trust and assume that those responsible for this will not be receiving golden handshakes when they depart.
It has now resumed trading, and is currently down around 21% at around 82p.
Congratulations to the board of Northern Rock for destroying this once solid company with their high risk lending strategy. They have succeeded in consigning the company to the dustbin of history, in a similar manner to the board of Marconi.
The shares in Rock are now the plaything of the speculators and will see rises and falls over the coming days that will make some individuals very rich, but will be of no comfort to the long term shareholders who bought in when the stock was valued at over £12.
I trust and assume that those responsible for this will not be receiving golden handshakes when they depart.
Monday, November 19, 2007
Clock Ticking For Rock
The Chancellor of the Exchequer, Alistair Darling, is seeking guidance from the European Union authorities in Brussels about how the £20BN Bank of England loan to Northern Rock can be extended without breaching the rules.
Meanwhile, Northern Rock's board met over the weekend to discuss the proposals it has received so far.
One is from Luqman Arnold's Olivant Group, which proposes to install its own management team in the bank, and the other from Virgin Group.
Rock revealed today that the bids are less than its share price; needless to say the price this morning fell like a stone, and was trading barely above £1 in early morning trade.
Northern Rock said:
"The value to shareholders from any of the proposals (and indeed any of the other strategic options available to the company) remains highly uncertain."
Shareholders have called on the Government to call off the auction, and are far from happy with the price.
However, realistically, what can they expect?
The company is dead, and has been destroyed by the board in a similarly reckless manner as the board of Marconi destroyed that once solid company.
The shareholders should focus their ire on the ex (soon to be ex) members of the board who did this, rather than the government.
Meanwhile, Northern Rock's board met over the weekend to discuss the proposals it has received so far.
One is from Luqman Arnold's Olivant Group, which proposes to install its own management team in the bank, and the other from Virgin Group.
Rock revealed today that the bids are less than its share price; needless to say the price this morning fell like a stone, and was trading barely above £1 in early morning trade.
Northern Rock said:
"The value to shareholders from any of the proposals (and indeed any of the other strategic options available to the company) remains highly uncertain."
Shareholders have called on the Government to call off the auction, and are far from happy with the price.
However, realistically, what can they expect?
The company is dead, and has been destroyed by the board in a similarly reckless manner as the board of Marconi destroyed that once solid company.
The shareholders should focus their ire on the ex (soon to be ex) members of the board who did this, rather than the government.
Saturday, November 17, 2007
Bloodbath at The Rock
After weeks of mounting pressure, following the destruction of Northern Rock, the CEO (Adam Applegarth) has finally been persuaded to fall on his sword and resign.
Applegarth will leave by the end of January.
His is not the only head to role in this debacle, that has seen not only a major brand/bank destroyed, but the first run on a British bank in 140 years (thus severely damaging the credibility of Britain's financial system and that of the regulatory authorities).
Matt Ridley, the much maligned and invisible chairman, resigned in October; the bank has now announced that four non-executive directors - Sir Derek Wanless, Nichola Pease, Adam Fenwick and Rosemary Radcliffe - will step down with immediate effect.
Applegarth earned £1.36M last year. Northern Rock refused to comment on whether Applegarth would receive a compensation package when he leaves the business. The more pertinent question is whether they actually would have the funds to be able to pay him.
Rock also stated that three further directors - David Baker, Keith Currie and Andy Kuipers - would step down from the board, although they would remain officers of the company.
A complete shambles, and a humiliation for Britain's financial services industry and regulatory regime.
What other horrors are lurking in the woodwork in other banks I wonder?
Applegarth will leave by the end of January.
His is not the only head to role in this debacle, that has seen not only a major brand/bank destroyed, but the first run on a British bank in 140 years (thus severely damaging the credibility of Britain's financial system and that of the regulatory authorities).
Matt Ridley, the much maligned and invisible chairman, resigned in October; the bank has now announced that four non-executive directors - Sir Derek Wanless, Nichola Pease, Adam Fenwick and Rosemary Radcliffe - will step down with immediate effect.
Applegarth earned £1.36M last year. Northern Rock refused to comment on whether Applegarth would receive a compensation package when he leaves the business. The more pertinent question is whether they actually would have the funds to be able to pay him.
Rock also stated that three further directors - David Baker, Keith Currie and Andy Kuipers - would step down from the board, although they would remain officers of the company.
A complete shambles, and a humiliation for Britain's financial services industry and regulatory regime.
What other horrors are lurking in the woodwork in other banks I wonder?
Friday, November 16, 2007
A Mere £1.3BN
Barclays sought to calm the markets yesterday by stating that its investment banking business could maintain its growth in spite of a write down of £1.3BN as a result of the credit crunch.
John Varley, the CEO, said that Barclays Capital and Barclays could weather storms in parts of their operations.
The bank wrote down £500m of credit, mortgage and leveraged finance assets for the third quarter of the year and an extra £800m for October.
Mr Varley said:
"We do feel confident about that [Barclays Capital's growth]. It is not unusual in an investment banking business to have some areas that are hot and some that are cold. The sub-prime area, which has not historically been a big area for us, is cold at the moment. We have other areas that are hot."
He added:
"Is the business model working well? Is the risk management working well? Is there diversification by geography and asset class? The answer is in the numbers."
Last week there had been rumours of a massive £4.9BN writedown and the resignations of Mr Varley and Bob Diamond, the head of investment banking.
John Varley, the CEO, said that Barclays Capital and Barclays could weather storms in parts of their operations.
The bank wrote down £500m of credit, mortgage and leveraged finance assets for the third quarter of the year and an extra £800m for October.
Mr Varley said:
"We do feel confident about that [Barclays Capital's growth]. It is not unusual in an investment banking business to have some areas that are hot and some that are cold. The sub-prime area, which has not historically been a big area for us, is cold at the moment. We have other areas that are hot."
He added:
"Is the business model working well? Is the risk management working well? Is there diversification by geography and asset class? The answer is in the numbers."
Last week there had been rumours of a massive £4.9BN writedown and the resignations of Mr Varley and Bob Diamond, the head of investment banking.
Wednesday, November 14, 2007
The PPI Scandal
The British financial services industry seems to have a death wish as far as it reputation with the consumer is concerned. Not content with foisting underperforming and useless endowment products on the unsuspecting public in the 1980's, it managed in more recent years to do the very same thing with PPI (Payment Protection Insurance) products.
The payback from this wanton mis-selling is now coming back to bite them.
Brunel Franklin, a claims specialist, has written to the Financial Services Authority (FSA) highlighting a number of serious problems in the PPI mis-selling sector, including what it believes is a deliberate statistical manipulation of the mis-selling figures by the PPI vendors.
According toe Brunel Franklin, Lloyds TSB and Welcome are some of the worst offenders and are offering gestures of goodwill across the board.
Anthony M. Sultan, managing director of Brunel Franklin said:
"We believe that vendors are using gestures of goodwill to mask the true scale of PPI mis-selling from the regulator. If the significant percentage of complaints are being dealt with as gestures of goodwill, how do we know that these are being declared to the FSA as complaints and showing up as incidences of mis-selling?
Lloyds TSB are pretending that there has been no mis-sale and no formal complaint, and are hoping to sweep thousands of complaints under the carpet under the guise of gestures of goodwill.
Our suspicion is that they are not being declared to the regulator and never appear in any FSA statistics on PPI mis-selling.
This mis-selling crisis may be bigger than endowment mis-selling in terms of the numbers of people affected and the total amount of compensation due, so it is perhaps not surprising that the vendors want to play it down in the hope that it will go away.
It will not go away and we are determined to get people the compensation they are entitled to."
As if endowments and PPI were not enough, the financial services industry also has "blood on its hands" wrt extortionate bank and credit card charges, credit refusals for people with good credit ratings, excess bonus payments to underperforming directors, excess management fees for underperforming investment funds and the destruction of Northern Rock.
Hardly a "stellar" performance so far!
The payback from this wanton mis-selling is now coming back to bite them.
Brunel Franklin, a claims specialist, has written to the Financial Services Authority (FSA) highlighting a number of serious problems in the PPI mis-selling sector, including what it believes is a deliberate statistical manipulation of the mis-selling figures by the PPI vendors.
According toe Brunel Franklin, Lloyds TSB and Welcome are some of the worst offenders and are offering gestures of goodwill across the board.
Anthony M. Sultan, managing director of Brunel Franklin said:
"We believe that vendors are using gestures of goodwill to mask the true scale of PPI mis-selling from the regulator. If the significant percentage of complaints are being dealt with as gestures of goodwill, how do we know that these are being declared to the FSA as complaints and showing up as incidences of mis-selling?
Lloyds TSB are pretending that there has been no mis-sale and no formal complaint, and are hoping to sweep thousands of complaints under the carpet under the guise of gestures of goodwill.
Our suspicion is that they are not being declared to the regulator and never appear in any FSA statistics on PPI mis-selling.
This mis-selling crisis may be bigger than endowment mis-selling in terms of the numbers of people affected and the total amount of compensation due, so it is perhaps not surprising that the vendors want to play it down in the hope that it will go away.
It will not go away and we are determined to get people the compensation they are entitled to."
As if endowments and PPI were not enough, the financial services industry also has "blood on its hands" wrt extortionate bank and credit card charges, credit refusals for people with good credit ratings, excess bonus payments to underperforming directors, excess management fees for underperforming investment funds and the destruction of Northern Rock.
Hardly a "stellar" performance so far!
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