We raised in a here post some time ago that it was inevitable that the EU would launch a big investigation into the legality of the Government's approach to Northern Rock.
Not only does the EU have a point, but also it never misses a chance to skewer Perfidious Albion when the opportunity occurs.
Indeed the support for this move comes from some odd places. Of all the banks to complain about Northern Rock's unfair current market advantage is the relatively obscure Danish Bank community.
Would it be going to far to say there may be a conspiracy here to push the Government into a corner? What a shame, especially after the recent NR results, unaudited of course, gave some hope that taxpayers would be paid back within 5 years...
NR results are audited, full accounts are on the website. In fact, I suspect this year they have been audited to death - would hope so given that PwC fees have gone up from £1.8m to £8.6m.
ReplyDeleteyou are right, what I meant to say is the business plan has no sign off - it does not need it now NR is a public body.
ReplyDeleteNice to see accounts always do well, whether a company wins or loses. Mark Wadsworth will be pleased.
Do what the Islamics do - organise a boycott of Danish goods. That'll learn 'em!
ReplyDeleteWe know what will happen: the EU will trade Brown on this one for something they want very badly from us
ReplyDeleteI am sure they have a Little List
We all know what will happen - nothing. The French and the Germans (and probably others) have all provided support to their banks as well in various forms (SocGen??) so no one will want to rock the boat.
ReplyDeleteAll they want is Lisbon ratification and the documents deposited with the government of Italy with no hold ups. The removal of the UK veto gets rid of a large thorn from their side and after that the UK can start asking how high to jump.
ReplyDeleteIt seems the Danish banks have a point given that Northern Crock has been operating in Denmark for some time offering attractive savings rates now guaranteed by the UK taxpayer!
ReplyDeletehttp://www.thisismoney.co.uk/investing-and-markets/article.html?in_article_id=431057&in_page_id=3
Note that Vince Cable has written to the EU complaining about the taxpayer subsidy too! Never trust a LimpDem...
However, I understand that NR are already closing this unit, so the EU may be a little late.
How I would love Labour to be humiliated by an equally corrupt and incompetent institution.
ReplyDeleteEven if an investigation finds no evidence of wrong-doing, the fact that Labour were investigated at all would bring a smile to my face.
My understanding is that NR/HMG can distort the UK banking market as much as they like without alerting DG Comp, but as soon as the distortion goes "inter state" they are in trouble. It does rather look like NR have been offering savings rates higher than the Danish banks can because of the HMG guarantee. In fact I think I saw a copy of an advert stating that Danish depositors were guaranteed by HMG.
ReplyDeleteI can't remember whether predatory pricing is unlawful if the undertaking is not already dominant in the market. I can't believe that offering a loss-leader is illegal under EC law but perhaps it comes under the state-aid rules?
Tory Boys - When it comes to the EU, it is one rule for those each side of the Channel. Long has Frankfurt and La Defense sought a way to curb our successes.
ReplyDeleteSchadenfreude/Ed - I am not so convinced that we have not broken state aid rules, but I am no lawyer Ed.
ReplyDeleteWe cannot just fund our companies as we see fit and unlike the others in Europe we went the full way towards nationalisation.
The way round this as Schaden states is for NR to stop doing many of the things it did. How this sqaures with still being able to make enough money to pay back the taxpayer loan I am not sure.
Still now the treasury are in charge of the Rock rather than the BOE, we can be sure things will get much worse...
I don't know what the state-aid rules look like I have never read them, but I do have a vague idea of the competition laws and I doubt that NR has broken them as such. I do agree that in principle the state should not distort the market in the way that it has. As BOM points out regularly, as soon as the government guarantee is removed many people will move their money out of the Rock causing a similar run to the one we saw in the summer.
ReplyDeleteCU, PwC may have charged an outrageous sum of money, but what you overlook is that all firms of accoutants hate each other, so that doesn't please me at all. But we all look down on solicitors.
ReplyDeleteI recommend that everybody reads the last two pages of the BoE's Banking supervision for beginners from 1997 (the title of the paper is misleading). It screams 'Northern Rock! Northern Rock!' AFAICS.
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