* Richard Pym, chairman of Bradford & Bingley, also to chair Northern Rock Asset Management (the new "bad bank") for joint £250,000 salary
* Gary Hoffman, chief executive of Northern Rock also to be chief executive of Northern Rock Asset Management
* Ron Sandler's salary for new "good bank" Northern Rock reduced from £350,000 to £250,000
* Mike Fairey (ex Lloyds TSB); Mark Pain (ex Abbey National); Mary Phibbs (Standard Chartered) appointed non exec directors of "new " Northern Rock
* Tom Scholar (HM Treasury's nark) and John Devaney to step down as non execs on 1 January
* NRAM will have assets of £50 billion
* NR will have assets of £10 billion - described as high-quality mortgages
* B&B and NRAM will continue to run down their mortgage books.
COMMENT : Observers believe this exercise will eventually show a profit for the Government. Shareholdeers are still denied compensation or their shares back.
Sunday 20 December 2009
Monday 14 December 2009
UK Credit Guarantee Scheme (CGS) extended
The CGS makes available, to eligible institutions, a government guarantee of new short and medium term debt issuance of up to three years' maturity.
Up to 4 December 2009 £134billion had been taken up.
Access has been extended to 28 February 2010, and applications will be dealt with on a case by case basis. Unused allocations will expire by 31 December 2009.
Up to £250 billion is available under the scheme.
Up to 4 December 2009 £134billion had been taken up.
Access has been extended to 28 February 2010, and applications will be dealt with on a case by case basis. Unused allocations will expire by 31 December 2009.
Up to £250 billion is available under the scheme.
Thursday 10 December 2009
Would you trust a bank set up by Steve and Dave?
Amongst the wierd things produced by Government are Statutory Instruments. Recently published : the Northern Rock plc Transfer Order 2009 and the Northern Rock plc (Tax Consequences) Regulations 2009.
The Orders were laid by two Lords Commissioners of Her Majesty's Treasury. These grand sounding gentlemen are listed as Steve McCabe and Dave Watts. (Because of the very odd nature of our structures, they are not in fact finance ministers but Government Whips who handle Labour Party discipline at Westminster)
The Orders transfer assets from what's described in them as ACo (Northern Rock plc) to BCo (Gosforth Subsidiary No1 plc) without tax liability. Then ACo will be renamed Northern Rock (Asset Managemetn) plc and BCo will become Northern Rock plc.
Confused? That may well be the intention!
In effect, the "good" assets of Northern Rock are being transferred to a new company, leaving behind a "bad bank", which is the one we have/had shares in (recently declared worthless by the £4.5 million paid value - I forecast this at the time he was appointed, could have saved the taxpayers the money)
The "good bank" will be the one this Government tries to flog off to "beardie" Branson or Tesco.
If American experience is anything to go by, the "bad bank" will eventually turn in a surplus for the taxpayer too.
But then we always knew we were being ripped off.....
The Orders were laid by two Lords Commissioners of Her Majesty's Treasury. These grand sounding gentlemen are listed as Steve McCabe and Dave Watts. (Because of the very odd nature of our structures, they are not in fact finance ministers but Government Whips who handle Labour Party discipline at Westminster)
The Orders transfer assets from what's described in them as ACo (Northern Rock plc) to BCo (Gosforth Subsidiary No1 plc) without tax liability. Then ACo will be renamed Northern Rock (Asset Managemetn) plc and BCo will become Northern Rock plc.
Confused? That may well be the intention!
In effect, the "good" assets of Northern Rock are being transferred to a new company, leaving behind a "bad bank", which is the one we have/had shares in (recently declared worthless by the £4.5 million paid value - I forecast this at the time he was appointed, could have saved the taxpayers the money)
The "good bank" will be the one this Government tries to flog off to "beardie" Branson or Tesco.
If American experience is anything to go by, the "bad bank" will eventually turn in a surplus for the taxpayer too.
But then we always knew we were being ripped off.....
Pre Budget report 2009
Below is a summary of the key points of Alistair Darling's Pre-Budget Report
National Insurance :
There will be an increase of 0.5% in the NIC rates payable by employees, employers and the self-employed in addition to the 0.5% increase already stated in the 2008 PBR.
There will also be an increase to the primary threshold and lower profits limit of £570 above those already planned in the 2008 PBR. This is to compensate lower earners for the proposed increase to the rates of Class 1 and Class 4 NIC.
The main rate of Class 1 primary NIC will be 12%, with a rate of 2% payable on earnings above the upper earnings limit. The main rate of Class 1 secondary NIC will increase to 13.8% (rather than the 13.3% previously announced) on earnings above the secondary threshold. The increase will also apply to Class 1A and Class 1B NIC
rates.
From April 2011, the main rate of Class 4 NIC will increase to 9%, with a rate of 2% payable on profits above the upper profits limit.
This should raise an additional £7 billion per annum from 2011, much needed to cover government debt.
Company Cars and Vans
Company cars: downwards revision of company car tax bands
The table of company car tax bands will be restructured from 6 April 2012 such that the 10% band applies to petrol company cars with CO2 emissions of 99g/km and below. The bands increase at 1% intervals for each additional 5g/km of CO2. The 3% diesel supplement still applies. Qualifying Low Emission Cars (QUALECs) will therefore no longer exist as a separate category.
Company cars and vans: tax on receipt of free private fuel : the figure used as the basis for calculating the tax charge on the benefit of private fuel received by an employee in a company car is to be increased from £16,900 to £18,000 from 6 April 2010. The figure used as the basis for calculating the tax charge on the benefit of private fuel received by an employee in a company van is to be increased from £500 to £550.
Electric company cars and vans: zero tax on benefit of private use
The percentage figure used to calculate the benefit in kind of an electric car/van will be reduced to 0% for five years from 6 April 2010. This is effectively a tax free benefit. Electric vans: 100% first-year capital allowances
Subject to confirming compatibility with the State aid rules, legislation will beintroduced to provide a 100% first-year allowance for business expenditure on new (not second hand) electric vans from 1 April 2010 (corporation tax) or 6 April 2010(income tax).
Note: where the term "electric" is used above, this is intended to describe a vehicle which is propelled solely by electricity and is not a hybrid.
VAT
VAT will revert to 17.5% on 1st January 2010
Stamp Duty
Stamp duty will revert to normal threshholds from 1 January 2010, ie : the minimum threshhold will increase to £175,000
Green Measure
A scrappage support scheme has been announced for old domestic boilers.
Public Sector Pay
This has been limited to no more than 1.0% increase per annum.
Bank Bonuses
Plans were unveiled to tax Bank bonuses in a one-off windfall tax of 50% for bonuses in excess of £25,000.
[Observers suspect this will prove to be totally ineffective as the banks will simply find a way round this. There's an email going round the City already which says : "Take a step back. This was designed by a f***wit
in about 2 weeks. They have given the finest brains in world finance 6
months to find a way around it. Doesn't really seem a fair battle does
it?"].
Summary - This Pre-Budget Report is light in susbtance and contained few surprises, typical in the run up to a General Election.
National Insurance :
There will be an increase of 0.5% in the NIC rates payable by employees, employers and the self-employed in addition to the 0.5% increase already stated in the 2008 PBR.
There will also be an increase to the primary threshold and lower profits limit of £570 above those already planned in the 2008 PBR. This is to compensate lower earners for the proposed increase to the rates of Class 1 and Class 4 NIC.
The main rate of Class 1 primary NIC will be 12%, with a rate of 2% payable on earnings above the upper earnings limit. The main rate of Class 1 secondary NIC will increase to 13.8% (rather than the 13.3% previously announced) on earnings above the secondary threshold. The increase will also apply to Class 1A and Class 1B NIC
rates.
From April 2011, the main rate of Class 4 NIC will increase to 9%, with a rate of 2% payable on profits above the upper profits limit.
This should raise an additional £7 billion per annum from 2011, much needed to cover government debt.
Company Cars and Vans
Company cars: downwards revision of company car tax bands
The table of company car tax bands will be restructured from 6 April 2012 such that the 10% band applies to petrol company cars with CO2 emissions of 99g/km and below. The bands increase at 1% intervals for each additional 5g/km of CO2. The 3% diesel supplement still applies. Qualifying Low Emission Cars (QUALECs) will therefore no longer exist as a separate category.
Company cars and vans: tax on receipt of free private fuel : the figure used as the basis for calculating the tax charge on the benefit of private fuel received by an employee in a company car is to be increased from £16,900 to £18,000 from 6 April 2010. The figure used as the basis for calculating the tax charge on the benefit of private fuel received by an employee in a company van is to be increased from £500 to £550.
Electric company cars and vans: zero tax on benefit of private use
The percentage figure used to calculate the benefit in kind of an electric car/van will be reduced to 0% for five years from 6 April 2010. This is effectively a tax free benefit. Electric vans: 100% first-year capital allowances
Subject to confirming compatibility with the State aid rules, legislation will beintroduced to provide a 100% first-year allowance for business expenditure on new (not second hand) electric vans from 1 April 2010 (corporation tax) or 6 April 2010(income tax).
Note: where the term "electric" is used above, this is intended to describe a vehicle which is propelled solely by electricity and is not a hybrid.
VAT
VAT will revert to 17.5% on 1st January 2010
Stamp Duty
Stamp duty will revert to normal threshholds from 1 January 2010, ie : the minimum threshhold will increase to £175,000
Green Measure
A scrappage support scheme has been announced for old domestic boilers.
Public Sector Pay
This has been limited to no more than 1.0% increase per annum.
Bank Bonuses
Plans were unveiled to tax Bank bonuses in a one-off windfall tax of 50% for bonuses in excess of £25,000.
[Observers suspect this will prove to be totally ineffective as the banks will simply find a way round this. There's an email going round the City already which says : "Take a step back. This was designed by a f***wit
in about 2 weeks. They have given the finest brains in world finance 6
months to find a way around it. Doesn't really seem a fair battle does
it?"].
Summary - This Pre-Budget Report is light in susbtance and contained few surprises, typical in the run up to a General Election.
Wednesday 9 December 2009
Northern Rock investors will not get compensation
Taken from The Guardian
Thousands of Northern Rock investors have suffered a setback in their claims for compensation following the nationalisation of the Newcastle-based lender nearly two years ago after the independent valuer concluded that there was "no value" in the bank's shares.
After receiving "several thousand" responses, the independent valuer Andrew Caldwell published a consultation document in which he concludes that shareholders should receive "no compensation".
His pronouncements came as the government said the nationalised lender could be split in two – in to a "good" and "bad" bank – on 1 January. However, government sources warned that hopes that the "good" part of the bank could be sold before an election were rapidly fading.
The division of the bank, which has been sanctioned by Europe, will have implications for mortgage customers of Northern Rock as some customers will be placed into the "bad" bank.
The Treasury select committee of MPs, which yesterday signalled it would begin a new inquiry into why some banks were deemed "too big to fail", is also expected to weigh the pros and cons of Northern Rock being turned back into a mutual – a status it held before 1997.
Responding to a campaign at Westminster, partly organised by the Co-operative Party and which has seen 100 MPs sign a parliamentary motion jointly calling for the bank to be remutualised, the committee will look at the "relationship between size and risk, and business model (including mutual models) and risk".
The investigation into whether shareholders should be compensated has taken longer than expected, Caldwell, a partner at accountants BDO Stoy Hayward, admitted. He encountered difficulties in obtaining the information he needed – and had been promised – when he was appointed by the Treasury 14 months ago. He did not receive some of the information until last month, further delaying the publication of today's consultation document. His report has cost £4.5m.
But shareholders, led by hedge fund manager Jon Wood, who have demanded compensation from the government and are determined to carry on their fight and are ready to take their claim to the European court of human rights in Strasbourg.
Wood, who is awaiting a decision from Britain's new supreme court about whether the methodology used by Caldwell can be challenged, said: "I do really think we'll get justice in the end."
Under the terms of his appointment, Caldwell based his calculation on the lender being in administration and no longer "a going concern" after all assistance from the Bank of England and the Treasury had been withdrawn.
He calculated how much money Northern Rock would have had left for shareholders after it had repaid the £25bn loan from the Bank of England, granted in September 2007 when it experienced funding difficulties during the credit crunch.
He concluded that it was "unlikely" Northern Rock could have been sold in its entirety and therefore searched for any assets the lender could have sold to raise the necessary funds. Following a complex analysis, he concluded that the lender would actually have had no money left after repaying the loan and would have been "in a deficit" of £5.7bn.
However, Wood and other shareholders have argued that the basis for the review for compensation should have assumed that the lender was still a "going concern" when it was nationalised. If this had been the case, shares in Northern Rock might have been valued at £4, Wood argued.
Thousands of Northern Rock investors have suffered a setback in their claims for compensation following the nationalisation of the Newcastle-based lender nearly two years ago after the independent valuer concluded that there was "no value" in the bank's shares.
After receiving "several thousand" responses, the independent valuer Andrew Caldwell published a consultation document in which he concludes that shareholders should receive "no compensation".
His pronouncements came as the government said the nationalised lender could be split in two – in to a "good" and "bad" bank – on 1 January. However, government sources warned that hopes that the "good" part of the bank could be sold before an election were rapidly fading.
The division of the bank, which has been sanctioned by Europe, will have implications for mortgage customers of Northern Rock as some customers will be placed into the "bad" bank.
The Treasury select committee of MPs, which yesterday signalled it would begin a new inquiry into why some banks were deemed "too big to fail", is also expected to weigh the pros and cons of Northern Rock being turned back into a mutual – a status it held before 1997.
Responding to a campaign at Westminster, partly organised by the Co-operative Party and which has seen 100 MPs sign a parliamentary motion jointly calling for the bank to be remutualised, the committee will look at the "relationship between size and risk, and business model (including mutual models) and risk".
The investigation into whether shareholders should be compensated has taken longer than expected, Caldwell, a partner at accountants BDO Stoy Hayward, admitted. He encountered difficulties in obtaining the information he needed – and had been promised – when he was appointed by the Treasury 14 months ago. He did not receive some of the information until last month, further delaying the publication of today's consultation document. His report has cost £4.5m.
But shareholders, led by hedge fund manager Jon Wood, who have demanded compensation from the government and are determined to carry on their fight and are ready to take their claim to the European court of human rights in Strasbourg.
Wood, who is awaiting a decision from Britain's new supreme court about whether the methodology used by Caldwell can be challenged, said: "I do really think we'll get justice in the end."
Under the terms of his appointment, Caldwell based his calculation on the lender being in administration and no longer "a going concern" after all assistance from the Bank of England and the Treasury had been withdrawn.
He calculated how much money Northern Rock would have had left for shareholders after it had repaid the £25bn loan from the Bank of England, granted in September 2007 when it experienced funding difficulties during the credit crunch.
He concluded that it was "unlikely" Northern Rock could have been sold in its entirety and therefore searched for any assets the lender could have sold to raise the necessary funds. Following a complex analysis, he concluded that the lender would actually have had no money left after repaying the loan and would have been "in a deficit" of £5.7bn.
However, Wood and other shareholders have argued that the basis for the review for compensation should have assumed that the lender was still a "going concern" when it was nationalised. If this had been the case, shares in Northern Rock might have been valued at £4, Wood argued.
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