The headline figure coming out of Northern Rock’s half-year results report is eye-grabbing enough: a loss of £724 million in past six months. But just as noteworthy are the comments made by the bank’s chief exec, Gary Hoffman, about the timeframe for a return to the private sector:
“The Newcastle-based bank, which is to be split into so-called good and bad banks, insisted that there was no timetable to find a buyer for the business before the upcoming general election despite repeated speculation that this is the government’s intention.
Gary Hoffman, chief executive, said: ‘The current environment continues to be challenging. However, against this backdrop Northern Rock is making progress against its revised plan and has delivered results in line with expectations. We anticipate receiving state aid approval in the autumn and the legal and capital restructuring of the company to be completed by the end of the year. This ultimately prepares for a return to the private sector.'”
On the back of Hoffman’s prognosis, as well as the results themselves, Robert Peston is saying that reprivatisation “may take a good couple of years”. I reckon even that could be optimistic.
It’s bittersweet news for the Tories. Politically speaking, it’s looking as though Gordon Brown will be denied what probably would have been one of the central planks of his “green shoots” strategy: selling off Northern Rock, and spinning it all as a massive success story. But, economically speaking, the next government will be lumbered with Northern Rock for years to come.
It’s a similar story for taxpayers. We should probably be glad if Brown doesn’t sell off the Rock, at a massive loss, for his own political ends. But we’ll be left covering more half-year losses like that reported today. Brace yourselves.
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