This is Going to be Interesting

So, we find out what is to be done with Northern Rock:

Without shareholders the bank can be deliberately run short-term in an uneconomic fashion. We're already guaranteeing the depositors, so looking after taxpayers has to be the priority. However, to achieve repayment Sandler must complete the biggest act of client churning in the history of financial services. To shrink the bank's balance sheet to pay off taxpayers, Sandler must redeem 60pc of Northern Rock's loan book in less than three years, shedding about 400,000 customers in the process.

Hmm. So essentially he's got to encourage the majority of the customers to take their mortgages elsewhere (by the by, that "uneconomic fashion" means "making losses" don't it? And, umm, without shareholders, who carries those losses? Umm, you and me, as taxpayers?).

Well, yes, and in the generally tighter conditions we have at the moment then who is it that is going to be able to leave? Yes, that's right, it'll be those who can get an attractive mortgage offer elsewhere: those with a decent chunk of equity, those with a low loan to income ration, those with a decent credit record. We have another name for such people: decent risks.

The peple who will stay wll be the people without such sterling qualities, that is, the bad risks.

So, at the end of this radical slimming, Northern Rock will have been stripped of all of its decent assets and be left with only those too dodgy to find a home elsewhere.

Not going to be worth a lot at the end of that, is it?

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