Effectively, the Government wants to sell a bank in order to prove that it can actually sell all the other banks it has bought on our behalf.
Only, it can't sell Northern Wreck, because it is still losing money hand over fist. Another £500 million this year. On top of the £3 billion taxpayers have already contributed.
Oh, and Tesco only want the deposits and the performing loans. And the offer is £1 billion.
So let's do some very back of envelope maths (this is the type most used in the treasury according to my sources):
Taxpayers - £3 billion in, plus holding £60 billion of loans sat with a 5% default rate. So add another £3 billion to that. Plus the extra £500 million loss this year. Plus £8.75 billion loan still outstanding, but expected to be paid back, without interest.
Total: £6.5 billion expected loss, on current liabilities of circa £70 billion.
Sale price to Tesco to cover losses: £1 billion.
Brilliant, ain't it?
10 comments:
Another good reason why the state should not be involved in owning companies - there is too much incentive to do outrageous deals in order to curry a few votes.
Now then, Tesco's bosses are good chums of several in the government, so why shouldn't they treat them to a nice bank and multi-billion backhander? After all they are all going to need a reference or something from them in the near future, aren't they?
Tesco and Post Office want the NR banking licence, not the bank.
Both would take the branches for a new 'people's bank' if it could be done for zero/minimal cost.
PO have pretty much given up with HMG's promises of operating a viable national low risk investments banking group. They are proceeding with Bank of Ireland, leaving the government out of it. Small business accounts and loans is the next stage.
Another opportunity to rein in retail banking practices and better control of money flow lost by the government's inaction and alternative propaganda plans.
BE - Wait until they have to sell RBS and Lloyds off in a few years!
D - Leahy is a Tory, perhaps he thinks it is funny to screw a Labour Government!
Great points BQ
Perhaps the Tories should say now that any dodgy deal done by Labour will be clawed back with a nice windfall tax!!!
for gordon that's quite some deal.
And Mandelson will tell evryone that it is best for Britain, and as they haven't a clue, they'll still breathe a sigh of relief at the magnanimous attitude of our Glorious Government...
Disgraceful.
Excellent post - more please!
I wish they would sell the NHS to Tesco as they seem to be quite good with people and logistics.
The amusing information
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