Northern Rock Directors are crooks - guilty of preparing false accounts and trading whilst insolvent
Northern Rock shares closed today at 257 p. per share. In the last Financial year they earned 94.6 pence per share - that is a yield of 37%. and a Price / earnings ration of 2.72.
This a company whose CEO claims on the company website that it "remain(s) a well-managed company and continue(s) to be a safe place for your savings, loans and mortgages."
"I want" he says,"to make it emphatically clear to all Northern Rock customers that we are open for business as usual."
This is self evident bollocks. It is a lie.The company is not only insolvent, but it is evident that the last year's accounts are mis-stated and the profits overstated proably by at least £500 MN which is represent the cupboard full of dodgy valueless Financial instruments....
"As announced on 20 August 2007, Northern Rock only has a £75 million direct exposure to the US sub-prime market which is all rated AAA, and a £200 million
exposure to the US CDO market, within which there is indirect exposure to US sub-prime.
We also have £325 million of investments in a number of Structured Investment Vehicles (SIVs)of which £305 million is bank sponsored. Included in the £200 million of CDOs referred to above is a modest exposure of £22 million of SIV Lites."
It is highly likely also, that the mortgage portfolio has a nightmare clutch of overvalued properties, many the product of this spring's manic sales drive to conceal their threadbare balance sheet. Many lent on the most dubious security. It is a fair guess that the total book is wholly unprofitable now and in the near future, however many of our golden duckets King throws at them.
Even now with the somersaulting Governor's pledge of pissing even more money up the walls of the City Bankers Parlours no-one wants even a piece , a sliver, a chip of Northern Rock.
The first impression was, that Adam J. Applegarth, Chief Executive was simply an over promoted, overpaid wanker. He isn't , he is a crook and so are the rest of the Board of Directors who are collectively guilty of preparing and issuing false accounts and trading whilst insolvent.
Far from declaring the company solvent ,the FSA should be getting the bastards disquakified and locked up.
There is undoubtedly a strong case for prosecuting the Bank of England, The FSA and the Treasury as well as the Chancellor of the Exchequer personally for acting as Shadow Directors and making false assurance to shareholders and depositors concerning the affairs of the company - resulting in massive financial losses.
UPDATE 0048 20th Sept
This note by Robert Peston on his BBC Blog has appeared - timed at early 2000hrs BST
IMPORTANT UPDATE: 19:59 The Bank of England has now told me that individual banks can only apply for £1.5bn each under the £10bn facility. It says that Northern Rock would have needed far greater funds - and that if this finance had been provided three weeks ago or so, the liquidity would not have eliminated the Rock's funding difficulties.
It is slightly odd that the Bank should divulge this to me now, because it failed to provide this detail (or any answer at all) when I asked this afternoon whether what it announced today could have provided succour to Northern Rock. So although the Bank of England has changed course in respect of the way it is prepared to tackle the crisis in the money markets, it is sticking to the position that it has no regrets about the way that it provided its initial support to Northern Rock.
If the above statement is correct (and there is no reason to doubt it) It is evident that the situation is a great deal worse than was at first understood. It is also evident that the Bank / FSA / Treasury are not providing information which can affect the share price in the appropriate and legal way.
It is further evidence that the company was insolvent prior to the first announcments made about BOE funding for the company.
The shares must be immediately suspended.The Directors must make a statement on insolvency and Administrators brought in to run the company.