Summer Lightning

It is nearing the end of June . It is Midsummer . Lord Emsworth, if he were still with us ,would be admiring his pigs and dreading the forthcoming Garden Party... A lot has happened since this time last year , especially in the financial world ... Let's just recall.

Adam Applegarth , CEO Northern Rock (who had bailed out of his shareholding (32.7Mn) in Northern Rock completely in January 2007)

Introduced the Interim results to June 30th 2007 ...Page 4

"...We are pleased to have achieved approval for use of our Basle II rating systems. This means that the benefits of Basle II enable us to increase our 2007 interim dividend by 30%. Going forward our dividend payout rate increases to 50% of underlying EPS from around 40%. Future capital planning, including the reduction of capital hungry assets, will allow us to return capital to shareholders through a share buyback programme.

The medium term outlook for the Company is very positive”

Later on Page 14 under the heading ...Capital Management and Basle II

"On 29 June 2007, we received notification of approval by the FSA of our Basle II waiver application. Our regulatory capital requirements, comprising both Pillar I and Pillar II, are therefore calculated under Basle II with effect from that date."

and on Page 15 he was happy to explain the rise in the Dividend (which alas was not to be for the shareholders)

"The introduction of Basle II, which requires less capital to support new lending, also enables a review of the Company’s dividend policy. It is proposed that for 2007 and beyond, dividends will be maintained at a payout ratio of around 50%. The interim dividend therefore increases by 30.3% to 14.2p (2006 - 10.9p) payable on 26 October 2007 to shareholders on the register on 28 September 2007." (eventually this was not paid - with Darling acting not only a as a lender of the last resort but also as a Shadow Director influencing the other Directors)

This was the time the Company Treasurer , Mr Keith Currie became "ill" - he had sold £1.1m worth of NR shares in 2007 and bought £2,992 . His job was described on the company website as ......"responsible for the management of the Company's Group Treasury function including liquidity, wholesale funding, derivative portfolios and the management of the Company's securitisation funding and covered bond programmes."

Deputy to Adam was David Baker, who had sold made £1.9m wrth of NR shares in 2007 and invested £50,032.

Meanwhile we learn from our ex colonies of the the Indictment this week of Mr Cioffi and Mr Tannin of Bear Stearns that almost simultaneously ..

54 ...... On June 26, 2007, investors were told that they could no longer redeem their investments in the High Grade Fund, regardless of whether or not they had already submitted redemption requests.

55. Eventually, investors were told that the Funds had both lost 100% of their respective values, resulting in a total investor loss of approximately $1.4 billion.

We also learn that a notepad computer of Mr Cioffi and a notebook used by Mr Tannin , quite naturally in all the excitement cannot .. er ... be found.

Meanwhile in England Northern Rock ... how to turn £14 Billion into £19.3 Billion between April and "over the summer" .Treasury prestidigitation and legendary legerdermain we discover that the loan balance owing from Northern Rock to the tax payer is £19.3 Billion.

Perhaps Adam is still ferrying Amanda Smithson (who is presumably by now ex Buy to Let) off to the Presidential Suite in the Four Seasons Hotel in Washington to shag his brains out. Perhaps he is playing cricket.

Let's not forget Adam walked away with a pension pot of £2.2 Mn plus 6 months salary. His total package in 2006 was £1.4million, including basic pay of £690,000 and a bonus of £660,000. Plus of course his well timed share sale.

Let us hope when the Serious Fraud Squad come calling on him and his fellow Directors they haven't mislaid any notes , or computers.

A very effective object lesson in how the criminal justice systems operate on both sides of the Atlantic.