Rock recovery
Northern Rock, the nationalised bank whose collapse is most closely associated with the onset of the credit crunch, is almost out of hospital.
In formal accounting or statutory terms, it actually made a profit in the second half of 2009.
But there were a couple of big one-off credits that flattered the bank – including a refund of £350m of supposedly penal interest rate charges levied by the Treasury, following approval of the Rock’s rescue by the European Commission
In underlying terms, there was a loss of £139m from July to December last year and a loss of £383m for the year as a whole.
Which looks very good compared with the stonking loss for 2008 of £1.3bn.
Costs have been reduced by almost a third, and the confidence of depositors seems to have stopped eroding – even though the Treasury has announced that it will no longer guarantee their savings in a formal sense.
The bank has now been split in two, with some £50bn of mortgages to be retained in state hands and a small retail bank to be put up for sale, probably in the second half of the year.
There’s even a fighting chance that, as and when that bank has been sold and the older mortgages have been paid off, taxpayers could end up making a profit on this most fraught of nationalisations.
View full post on BBC NEWS | Peston’s Picks