Bob Bennett and Northern Rock - a pattern emerges -Après moi le déluge

Those who heard Bob Bennett on Radio 4 "Today" programme yesterday may well be inerested in this interview he gave when he announced his retirement. We have not heard the last of Mr Bennet or his relationship with Mr Applegarth.

He described the then-chief executive Adam Applegarth as "an energetic, youthful, growth-orientated individual"."He was difficult to deal with and he was difficult to handle," said Bennett who described himself as a "safe pair of hands" in the City's view.

Northern Rock should never have gone to the Bank of England for emergency financing in August, Bennett said, suggesting it should have taken action to scale back its lending.
Asked if the management was to blame he replied: "Partially, .... yes".

Interview: Moving On – Bob Bennett, group finance director at Northern Rock
Clare Bettelley Finance Week - 18-Sep-2006
Northern Rock group finance director, Bob Bennett announced his early retirement today. He tells Clare Bettelley the reason behind his decision and his plans for life after Northern Rock.

Finance Week: You told Finance Week last year that you would “definitely” not retire before your 60th birthday, next May. What changed?

Bob Bennett : I will continue to be employed until May (He was then 60) . If you think about the results, it makes sense to do the year-end and for the new guy to start as early as possible in the New Year.

FW: Were you forced to go? (now why ask that ?)

BB: No. If we had recruited an external candidate, then possibly I would have gone earlier. Some new people do not always want the old guy around.

FW: How many internal and external candidates did the bank consider?

BB: Dave Jones was the only internal candidate - he was always seen as the clear internal candidate. Northern Rock has a fairly static strategy about what it wants to do. Dave is completely conversant with this.

FW: What have been the highlights of your 13-year tenure?

BB: I am a forward-looking kind of guy, not a nostalgic one. It is not the end of Bob Bennett.

FW: But what would you consider your achievements?

BB: I always wanted to be an accountant. If someone had said I would be a finance director of a FTSE 100 company, I would have been happy.

FW: Will you consider extra non-executive director roles in addition to your post at Greggs?

BB: If people see me of use, then of course I would.

FW: What projects will you leave unfinished?

BB: I will not leave anything unfinished; it is not my style. The Basel II project will continue. One of the things that I am pleased about is that I am not a megalomaniac. I see it as a relay race, and have ensured that Dave’s been involved with all big projects.

JC Flowers wo looked at a take over of NR briefly, included Bob Bennett in their managment team for ther take over.

See also Accountancy Age the Daily Telegraph also had what will be seen as a very prescient article on September 19th 2007 which mention BB's departure and the consequences.

The worst of all possible worlds = Northern Rock Directors allowed to carry on regardless

Resolutions 1, 5, 6, 7, 8 and 9 were carried and resolutions 2, 3, and 4 weren't.

Consequently all the Directors proposed for re-election have been elected.

SRM and RAB Capital and their supporter's (?) resolutions were defeated with the exception of Resolution 1 (which only required a simple majority unlike the other proposals which needed a 75% majority vote) - so the Board cannot allot shares with a nominal value above £5 million without the approval of shareholders in a general meeting.

The three (narrowly) defeated resolutions therefore mean that the Directors are not hindered from selling more than 5 % of its assets,nor an imposed £5 Mn. annual limit on equity fundraising and an obligation to preserve the company's current share capital structure.

A perfect recipe for more prevarication, obfuscation, delay, confusion, payment of excessive fees to "advisors" loss of retail depositors and a virtual certainty that funds cannot be raised in the market either as straightforward loans or funny money bonds as proposed by Sacks of Gold wizards of City Finance.

Northern Wreck shares eventually closed 16 pct lower at 69-1/4 pence, valuing Northern Rock at about at 291 mln stg.

How anyone can say that a regular market in the shares is available is delusional , dishonest and mad - rumours swept the meeting before it started that Adam Applegarth (ex CEO and staff shagger) was present , dressed in drag , whilst this can be believed it cannot be confirmed.

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.