Northern Rock has weighed in with six month losses of £724 million. £122 million of that is current loss, on top of the £602 million of losses on past poor loans. No-one in government seems to think that is either bad or surprising. Forecasters think the second half should see something similar.
If you own a busienss losing money on that scale you should be changing the top management and demanding better performance. You should be cutting costs and concentrating on finding new profitable business. You should not just plough on as if it did not matter.
Now we hear there is an even sillier idea, of splitting a bad bank off from a good bank and selling the good bank. Poor old taxpayers. We end up with all the bad and doubtful debts, and let some management team take away the better assets to make more money for themselves on the back of assets they have chosen for the task. Why on earth would we want to do that?
I want Northern Rock sold back in to the private sector as soon as possible. We need to sell the bad bets along with the good bets, after suitable provisioning and assessment. How much more bad news is there to write off? Why haven’t they done it yet? Why can’t they get into profit on the rest of the business? Why aren’t they making any progress in creating some value for taxpayers?
It is the predicatable disaster you would expect from a nationalised bank run by these Ministers and their apppointees. They changed the rules for NorthernhRock from wind down to beef up. The answer will just be huge taxpayer losses.