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Should bankers be hunted down like dogs?

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Bankers deserve everything they get
Yes, and they should go on getting it
32%
 32%  [ 12 ]
No, they should be cast into outer darkness
67%
 67%  [ 25 ]
Total Votes : 37

CB27
861610.  Wed Nov 02, 2011 2:35 pm Reply with quote

I personally found that remark of hers to be one of the most offensive things I've heard from an international leader for a long time.

 
Spud McLaren
865168.  Thu Nov 17, 2011 3:38 pm Reply with quote

I'm puzzled. The non-toxic part of Northern Rock has just been re-privatised, going to Virgin Money for 747m, with possible further future amounts totalling up to 280m. The government paid 1.4bn for it on nationalisation. Yet our beloved Chancellor is trumpetting this as a good deal for the British taxpayer. Now I could be persuaded to accept that it may be the best deal we're going to get, but I don't think it can fairly be described as "good".

Unless Neo has a different take on the situation (and that's not meant to sound like a dig, I'm merely acknowledging that it's Neo's specialist subject).

 
suze
865184.  Thu Nov 17, 2011 5:48 pm Reply with quote

Given that non-toxic Northern Rock is currently operating at a loss, I suspect that it probably was as good a price as we were going to get. Furthermore, Virgin is paying about 80% of book value, while the quoted banks are currently trading at a level which represents about 50% of book value. In isolation, that might suggest that Virgin is actually paying too much - but if it is, that is more The Bearded One's problem than anyone else's.

The question that we should perhaps be considering is why the government has chosen now to sell Northern Rock. There's no good time to sell a business at a loss, so we must imagine that the government considers now less bad than waiting another year. Ed Balls disagrees, which is hardly surprising. But so does the Daily Mail, which might be more of a surprise.

Let us suppose that the government has this right, and that we can get more for Northern Rock now than we'd be able to in a year's time. That doesn't bode especially well, does it?


One other point on this deal. Virgin has "promised" that there will be no compulsory redundancies for at least three years. Is that to be included in the legal framework for the deal, or is it worth about as much as Kraft's "promise" not to close the Fry's chocolate factory in Bristol when it bought Cadbury's? (A "promise" which would better described as a "lie", since Kraft went back on it within a month of completing the deal.)

 
Gooische Vrijgezel
865200.  Thu Nov 17, 2011 6:58 pm Reply with quote

suze wrote:
Let us suppose that the government has this right, and that we can get more for Northern Rock now than we'd be able to in a year's time.


Let's not suppose that. Because a government isn't an investor trying to make as much money as possible, using other people's money for their risky investments.

 
Spud McLaren
865204.  Thu Nov 17, 2011 7:05 pm Reply with quote

Not in this case, no. But we were faithfully promised (said he, with enormous amounts of reverb effect) that the government would recoup all the money laid out in the bail-out.

 
suze
865207.  Thu Nov 17, 2011 8:04 pm Reply with quote

Well we were, but that promise was made by a different government.

I don't know enough about matters financial to know whether Gordon Brown was talking out his ass when he said that, whether it was a reasonable aspiration at the time but is not now realizable, or whether the current government ought to have been able to get more for Northern Rock. With any luck, someone else may be able to comment on that.

But even I (!) can't really seek to blame the current government for something that the previous one said.

 
exnihilo
865208.  Thu Nov 17, 2011 8:04 pm Reply with quote

And we may yet. Just not on this one minuscule part of the reselling. Perhaps the Government also feels that Virgin has a better chance of taking this dog of a company and making money with it - and thus tax revenues.

 
Neotenic
865215.  Thu Nov 17, 2011 8:24 pm Reply with quote

There's one big fat thing missing from the sum Peston employs to arrive at figures of losses - and that is the existence of Northern Rock (Asset Management) plc.

This is the 'bad' bank - or, in other words, a great stack of outstanding mortages and other loans. The government has hung on to that. Aside from losses through loans going bad, that is going to remain a profitable endeavour. To the extent that it repaid 1.1 billion of government loans in 2010.

A scary figure of 21 billion is shown as the 'potential loss' for the Asset Management entity in the BBC reporting - but the only way that potential can be realised is if every single Northern Rock borrower stops payments to their mortgages tomorrow, and then all their repossessed houses have a resale value of zero. I think this is probably unlikely.

I suspect that, as the now closed mortgage book winds down over the next 15-20 years, the profits from that will be somewhat in excess of the 500 million 'paper' loss. And now the taxpayer is not on the hook for propping up the 'good' bank - which is, somewhat counter-intuitively - currently running at an operational loss.

 
tetsabb
919172.  Sun Jun 24, 2012 5:48 am Reply with quote

Just resurrecting this thread in view of coverage of news items involving the following words --
Stephen Hester -- Natwest/RBS/Bank of Ulster -- 4 days -- computer glitch
I can expect certain voices to leap to Mr Hester's defence, saying it is not his fault and he still deserves squillions in bonus.
All I will say is that I seriously disagree.

 
Neotenic
919227.  Sun Jun 24, 2012 9:21 am Reply with quote

This has nothing to do with the CEO. Astonishingly, they are not omnipotent.

The IT Director, on the other hand.....

Of course, four days without customers being able to access their accounts at all is likely to have quite a material impact on the bonuses of the entire executive - but that most certainly doesn't make it the 'fault' of Hester.

A mistaken strategy, or a bad deal is within the purview of the CEO - but making sure the computer systems don't fall over is the responsibility of others. And I won't be at all surprised if there are some people that lose their jobs over this.

 
'yorz
919230.  Sun Jun 24, 2012 9:27 am Reply with quote

So - where does the buck stop?

 
PDR
919237.  Sun Jun 24, 2012 9:52 am Reply with quote

With the person who made the poor decision or whose action/in-action caused the problem. ANy other approach would just be stupid.

PDR

 
tetsabb
919609.  Mon Jun 25, 2012 5:39 pm Reply with quote

I have just seen Hester on the news making a very bad and pretty meaningless comparison of his bank's problems with Heathrow stacking up flights when it rains.
Not impressed.

May I turn this thing round a bit?
In my job, I set the signals on the motorways when problems arise.
If, for example, we had a blazing petrol tanker in Lane 1 of the M25, and I set signals wrong and closed all lanes, except Lane 1, and a friend or relative of yours drove into the firey ball of death and was consumed by the flames, how far up the tree would you want the blame to be aportioned?
Just me?
Me and my immediate supervisor at the time?
Up to the Head Honcho?
As 'yorz asks, where does the male rabbit come to an end?

 
Efros
919615.  Mon Jun 25, 2012 5:59 pm Reply with quote

My perception is that they believe the likelihood of sacking is inversely proportional to the salary, i.e. the higher the salary the less likely they are to get the bullet. Or if they do indeed get the bullet then they get to cash in those 'leaving terms' in their contract as in this example.

 
exnihilo
919628.  Mon Jun 25, 2012 6:37 pm Reply with quote

Does the buck not stop with where the fickle public thinks it should? It's never enough to make apologies, pay compensation, or even dismiss those who were actually responsible. The people want the top man to topple every time there's a mistake and, dammit, this is a democracy so everything must be subject to the whims of the vocal mob.

 

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