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Thread: Northern Rock-Branson's biggest blunder?

  1. #1 Northern Rock-Branson's biggest blunder? 
    The Doctor Quantime's Avatar
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    Anyone from England will know the kurfuffle that is being centred on Northern Rock pending the recent downfall of the bank, from share prices dropping down to about 25p per share. Richard Branson chairman of Virgin is the preffered bidder to purchase Northern Rock and since then share prices have risen to over a pound per share, given the recent problems with Northern Rock it is a huge leap. However this is a bank and is something Branson is not into fully. There was only a small profit made by Virgin compared to Northern Rock and the same goes for assets and everything else. If Branson pulls this off and gets his soon to be bank of the ground he will have the opportunity to boost the funds of Virgin all told, but a lot of cash is going into this, Branson's agreement with shareholders is that they have to pay a huge amount on top of the current shares they have to enable a furthur £1.3 billion into the bank. Is Branson a bit to high horsed on this? If the risk pays off we are looking at a bright (and rich) future for Virgin. Comments?


    "If you wish to make an apple pie from scratch, you must first invent the universe". - Carl Sagan
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  3. #2  
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    JC Flowers and Branson, as I understand it are offering 50p per share, in an effort to take over NRB. This far short of what the where a few days ago (97p).

    The Bank seems to have a good balance sheet as well, meaning its assets are greater than debts...If true, the offer is not likely to be accepted, however if accepted, Branson (VAL) and Flowers will do quite well. IMO.

    In the US, I am watching Citigroup, with a similar story. One of Dubai's, Monarchy has purchased 7 or 8 billion dollars of stock, not to take it over but as an investment. Currently the stock is up very little, even with that purchase. 30.00 to 32.00 or so...about half its recent highs. CG has about 30B$ is cash....E-Trade, on the other hand is borderline with more debt vs. assets. In this case its likely they will be bought out (acquired) where their trading unit, has an additional value to other like interest.

    We have a little history in the US, based on the 1990 Savings and Loan
    crisis, which has been and is now, playing out in the same manner. Keep in mind the current problems for Mortgage Banks, is getting there assets (loan accounts) aligned to current values and rates. Its not that difficult to do, but requires time, investment infusions and a cooperative client's.


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  4. #3  
    Forum Cosmic Wizard icewendigo's Avatar
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    Northern Rock

    I dont have all the details, but if tax payer money's being used to prop up a bank when things go bad and profits go to private shareholders when things are good theres something rotten, if the Public is to help bail out Northern Rock the Public ought to get dividends when it makes profits.

    (Not to mention the fractional reserve scam and making money out of thin air and debt racket)

    The other thing that annoys me is that millions of people around the world have lost money with the sub-prime etc but the weasels that pulled it off have made profits and passed the hot potato(risk) to others.

    Theres a good video more or less related, but interesting nonetheless, its on the PBS websit, search for Bill Moyers Journal, then look in the archives for an october show called something like 'heading for 1929?'
    It compares the lack of effective oversight on wall street in the pre-crash/depression time and now.
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    NR Bank has vast assets that they can't tap at the moment, mainly in the form of loans that haven't been paid back yet. Their problem is that they tied too much of their money up in long-term loans, so they ended up with a temporary cash shortage. Branson is probably just thinking ahead - if the bank's stock is badly under-valued at the moment beause of all the bad publicity it has been getting, Branson might view it as a chance to aquire something very cheaply that will bring in a lot of money in the future. In fact, since he's trying to buy NR it seems like a pretty safe bet that that is how he views it..

    Quote Originally Posted by icewendigo
    Northern Rock

    I dont have all the details, but if tax payer money's being used to prop up a bank when things go bad and profits go to private shareholders when things are good theres something rotten, if the Public is to help bail out Northern Rock the Public ought to get dividends when it makes profits.
    The "bail out" is simply a massive loan from England's central bank. That's one of the main purposes of central banks, after all - they loan money to national banks when the national banks get short on liquid funds or accidentally dip below the reserve requirement. NR will have to pay the money back over time, with interest. But since banks always set the interest rates on their loans to customers higher than the rate for a loan from the central bank, they should still make money.
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  6. #5  
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    Branson can afford to make some blunders.

    Money makes me laugh.

    It's a human invention and yet it causes some of the worst forms of suffering in the world.

    Economies are just another way to fool and mislead millions of people into believing in this God called money and for the movers and shakers of this world to lead everyone by the nose into doing and behaving and thinking exactly how they want us to.

    Yet we can't escape this force of evil unless we all become totally self sufficient.

    Catch 22
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  7. #6  
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    Quote Originally Posted by Selene
    Branson can afford to make some blunders.

    Money makes me laugh.

    It's a human invention and yet it causes some of the worst forms of suffering in the world.

    Economies are just another way to fool and mislead millions of people into believing in this God called money and for the movers and shakers of this world to lead everyone by the nose into doing and behaving and thinking exactly how they want us to.

    Yet we can't escape this force of evil unless we all become totally self sufficient.

    Catch 22
    Lets just go back to being cavemen so... I'll bring the stones.
    Thinking of the question is greater than knowing the answer...
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  8. #7  
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    Quote Originally Posted by Barry Flannery
    Quote Originally Posted by Selene
    Branson can afford to make some blunders.

    Money makes me laugh.

    It's a human invention and yet it causes some of the worst forms of suffering in the world.

    Economies are just another way to fool and mislead millions of people into believing in this God called money and for the movers and shakers of this world to lead everyone by the nose into doing and behaving and thinking exactly how they want us to.

    Yet we can't escape this force of evil unless we all become totally self sufficient.

    Catch 22
    Lets just go back to being cavemen so... I'll bring the stones.
    Let's just get stoned, behave like cavemen and you can beat me with your mammoth bone?

    Sorry Barry i know you are young, but i just couldn't resist that one. I'm sure you'll get worse to come as you get older if you mix in the right circles :wink:
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