Bank of England warns "There's NOTHING we can do ...er .... right ....." Part 2

As a public service on the monthly anniversary, we are happy to re-post this post which first appeared just a month ago. Happily coinciding with the announcement that Consumer prices rose 4.4 percent from a year earlier, breaching the government's 3% upper limit for a third month and the most since comparable records began in 1997(The 0.6 % increase is the largest jump since the series began in 1997. Based on a constructed index using retail-price data, it was the largest gain since 1991, the ONS said), the Office for National Statistics said today. That exceeds the 4.2 % median forecast of 38 economists in a Bloomberg News survey.

This means of course that miserable Mervyn will have to pop his 3rd third letter of explanation to the government in the Post Office (assuming he can find one still open) - that is unless inflation slows to 3 % in August - which about as unlikely as Northern Wreck turning a profit this side of Armageddon.

Anway here is last month's cheery tale of rank incompetence, woe, grief and downright misery.



This is what Lord King Chairman of the Bank of England said in his annual speech to the great and the good of the City of London at the Mansion House just over one year ago on the 16th June 2007...

"Our central view remains that inflation will fall back this year as the rises in domestic gas and electricity prices last year drop out of the annual comparison, and the recent cuts in prices feed through to household bills."

PS : Mervyn has a pension pot of £4.8million, which should be worth nearly £180,000 a year on retirement...which cannot come too soon.

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.

Darling has a track record on Computer hacking

Hansard Column 539 10th Jan 1988
Computer Hacking

Mr. Darling : To ask the Secretary of State for Defence if, pursuant to his answer of 13 December 1988, there have been any attempts to interfere with unclassified systems by any computer hacker.

Mr. Archie Hamilton : Two such attempts have been detected. Both were defeated by security precautions.

It seems a pity that his wide and deep interest was not maintained and that the security of HMRC systems was not subject to a similiar forensic scrutiny by him.

Apparently Plod is scouring several rubbish dumps (including Deptford Re-cycling Centre , Landmann Way, Deptford London SE14 run by HTL Waste Management Services) for the slipped discs....all that overtime Sarge' ..."luvverly jubbly".

Strange. We were told last week that the discs ..." have probably not left government property, HM Revenue and Customs (HMRC) believe".

Just how does a courier firm take such a parcel without providing a receipt ?

It has been revealed that Steve Lamey who was Chief Information Officer and identified by Lord Patel as the man in the hot seat ,was paid £240,000 per annum.

Northern Rock - a Turd by any other name

FT Alphaville have posted the "confidential details " of the BOE memorandum about the sale of Northern Wreck (Codename "Blackbird" AKA Turdus merulus of the Family Turdidae - someone at the BOE with a keen sense of ornithological humour ?)) for prospective buyers.
http://ftalphaville.ft.com/blog/2007/11/13/8870/project-wing-the-northern-rock-briefing-memorandum/

The document is curious - it says the Wreck expects to have a credit line of £24bn from the taxpayer (AKA BOE) as at 1/1/08 - although by most people's reckoning it stands at £30Bn. today.

The loan rate and other terms, length, termination triggers etc., are not available but ..."any potential purchaser/investor... will need to have discussions with the Bank of England and its advisers before concluding any proposal."


The business is unsaleable without this loan and this is tacitly accepted - in 2010 the Rock will require at least £6bn from ..er..." a Replacement Facility"

3 outlines scenarios are given ... all demanding BOE support and evidence that they just want this mess off the doorstep of Threadneedle Street.

• sale of the whole company; (In two words Im Possible, you could not GIVE the company away)

• sale of the basic physical infrastructure of the business, viz. the branches, IT and call centre, - the loans from the remaining stupid, short siighted retail lenders who haven't even now moved their funds to higher and safer ground.

• sale of above plus those securitised mortgages, and a "run off" of the rest - in which case the Credit Rating agencies are left withj a problem to rate and this could leave to a "trigger" by which the holders can demand their money back. (The Credit Agencies are remaining remarkably silent re the value of "Granite" etc.,

Anyone who still holds shares is a mug.

Northern Rock - full figures revealed - Ugandan babe exposed as busy body and unwanted by Darling

Northern Rock Timeline

1. 25th July 2007 Interim results published for 6 months ending 30th June 2007.

Interim dividend announced per share of 14.2p (2006 interim - 10.9p) - an increase of 30.3%

(Statutory profit before tax of £296.1 million up by 0.7% compared with H1 2006.)

2. We now know that on Friday August 3rd there were discussions involving at least the Bank of England the Financial Services Authority, Directors of Northern Rock and Lloyds Bank about the BOE approving funds up to £30Bn to Lloyds Bank PLC for 2 years for them to take over Northern Rock.

It is further apparent that Baroness Shriti Vadera and her ex employer UBS Warburg were involved in these discussions.

We also know now that the Chancellor of the Exchequer (who MUST have discussed this with the PM) dismissed this - and rumour has it that he effectively told the Ugandan princess to keep her fucking nose out of Treasury affairs and stick to her Ministerial brief.

(NB : Talking of briefs and the fragrant and unlovely Shriti, the Sunday Telegraph repeat the rumour on November 4th that the noisy Ugandan babe at Somerville purchased wholesale quantities of silken underthings when at Somerville (so , as she told colleagues she didn't need to wash them). The truth is that great sport was had with the lady - as the ultimate trophy for the Lothario's of those quarters was a pair of the vast knickers which they had to remove from the willing, (but alas unsatisfied limbs) of the loudly complaining lady. A correspondent adds (for those with a long memory) that she used to sew in "Janet Reger" product labels to impress he deceitful de-flowerers - which rather gave the game away as JR never made undergarments in such a capacious size).

3. Mervyn King in an interview on BBC "File on 4" ..

"I think most people expect that we have several more months to get through before the banks have revealed all the losses that have occurred, and have taken measures to finance their obligations that result from that, but we're going in the right direction."

"O" Level EConoics Paper Q 1.

How can Directors on the basis of interim profits up by 1% increase dividend by 33% and then less than 2 weeks later be involved in discussions for their take over involving a GUARANTEED Bank of England loab facility of £30Bn. for 2 years ?

Now after this ... (from their website)

Your money is safe with us. All new and existing savings are guaranteed.
Our new guarantee arrangements agreed with the Bank of England and H.M Treasury protects all retail savings in all accounts - regardless of the amount deposited. It applies to all existing accounts, all re-opened accounts and to all new accounts.

BBC Online report in the last hour ..."Northern Rock shares fell as much as 12% in early London trade after a report that savers had withdrawn £10.5bn from the stricken bank."

This whole episode displays criminal incompetence and the grossest misuse ever of public funds ... BOE exposure is now at least £25 Bn and looks like hitting £30Bn. ... not too far distant from the whole annual budget for the MOD. See General Charles Ronald Llewelyn Guthrie, Baron Guthrie of Craigiebank, GCB, LVO, OBE, DL.