Thursday, 16 June 2011

For sale: Northern Rock PLC

Do you want to buy a bank? If yes, you're in luck: the govt has one for sale. It's Northern Rock, the bank which kicked off the credit crunch back in 2007 when long queues formed outside its branches. The bank went bust and chancellor Alistair Darling took it into public ownership. The shareholders got no compensation.

The government has divided NR into two banks: a "bad" bank containing all the bad debt, and a "good" bank holding all the deposits and customers. It's the "good" bank that's for sale you'll be relieved to hear.

And who did all this good/bad restructuring for the government? Well, prominent at the top table has been one Gary Hoffman, the CEO the government put in to fix the broken bank after the departure of Adam Applegarth, the captain who went down with his ship. So Hoffman has been beavering away sorting out the mess, deciding which bits go into the good bank and which into the bad bank and in the process sacking a fair few staff.

But if you do want to buy NR you'd better get a bid in fast. Others are ahead of you. In November last year Hoffman quit rather suddenly saying he was off to join a new outfit called NBNK Investments.

So what do you reckon the chances are that NBNK Investments will be making a bid for Nothern Rock, and head of their bid team will be the man who knows which closets contain skeletons, because he was the one that put them there?

This blog reckons that's a dead cert.

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