So what you are really saying is that Labour short changed the taxpayer?

The last government sigbed an agreement that NR would be sold off before 2013, and the forecasts are for NR to keep losing money and thus be worth less in the near future than what Osbourne sold it for.

Yes, the taxpayer has lost money, but Labour nationalised NR, and an agreement they signed means that the sale Osbourne just concluded maximised the return we got for the bank.

I don’t know that you can say that’s changing his tune..surely it’s what he predicted very much coming true?

@1 – Wow, you can even blame Labour for the actions of this government. That’s some ideological blinders you got there!

So what you are really saying is that Labour short changed the taxpayer?

Yeah because they structured the deal!

You must be working at a TPA non-job Tyler, since your job seems to be to spend the whole day trolling here. I highly doubt you work at a financial institution

well, do you blame the party that overpaid for the assets in the first place, knowing what we know now, or the party that chose to sell them at this point in time? Vince says you make a loss if you buy rubbish but obvious depends on what you pay for it.

actually, you could blame nobody, maybe both prices were right on basis of information available at the time. we shall never know.

btw not sure what it means to structure things so “debts are still held by taxpayers” – Of course when you buy a financial business, you buy both its assets and its liabilities (debts). Perhaps it means that bad bank’s debts are known, but value of its assets are unknown, so we may be left with liabilities>assets. Or vice versa (I am not optimistic)

Scratch that last bit of last comment. You could of course merely buy a bundle of assets.

Over 90% of Northern Rock (Asset Management) plc mortgages (the bad bank) are fully performing. Quite likely that the taxpayer will get all their money back even from the assets of the bad bank. Will probably take them a decade or so to run down the loan book.

Whether the taxpayer got good value for Northern Rock plc from The Beard is a difficult one. Sure, HM Treasury purchased 1.4 billion ordinary shares of £1 each at the beginning of 2010 for them to comply with regulatory capital requirements. If they do get a total of £1 billion from The Beard and friends (not certain) that does crystallise a £400 million loss for the Treasury. However, that is hardly the same thing, as some have claimed as a £400 million gift to The Beard. Since the beginning of 2010, the value of nearly all bank equity has significantly declined. Therefore, the shares that the taxpayer was holding in NR even though they were not traded on public markets have also declined in value. Banks with a whole bunch of new regulations are just not going to generate the same returns on equity going forward. Therefore, all the banks have a lower valuation. They got around three quarters of book value for NR. Lloyds and RBS shares on public markets are currently trading below half book value. From that point of view it was not a terrible price in the present environment. However, the crucial point is that this is probably an awful time to sell bank equity. Maybe they think bank valuations could go lower. I suppose that is possible if the EZ completely implodes. On balance, I think they just wanted to get away a disposal, however, they are probably selling near the bottom of the market for banks. The EU competition commissioner said the state must withdraw before 2013. However, that would not have prevented them mutualising NR.

The strange thing is the way it has been presented as being bought by The Beard. He is very much a minority shareholder behind Wilbur Ross, and Middle East investors. The £150 million perpetual loan actually looks a good deal for the taxpayer. A 10.5 per cent rate of return fixed in perpetuity for the government is a good rate of return. Moreover, the government can sell the £150 million loan note on the open market, or convert the loan note into shares if they float.

@ leon wolfson

It was Labour who did the NR deal and had the contract in place with the EU to force its sale before 2013.

@ sunny

I’m an interest rate trader, but don’t work for a UK financial company at the moment. Every know and again I have a bit of time to read a few sites.

You however aren’t really a serious evidence based blogger any more. You veer between a loony lefty parody of the paper you so despise – the daily mail – and a labour party propaganda mouthpiece.

I don’t think I’ve seen one story on here which wasn’t “on message”, and the intelligent, credible bloggers like Duncan Wheldon have been replaced by complete loons like Richard Murphy and 0wen “tax incidence” Tudor.

I understand they considered mutualism but decided against it. I wonder why this was better. Cash in hand?