Sunday, February 17, 2008

And the cash just keeps on flowing

After a debacle seen by many as the collective low point of the Treasury, the FSA and the Bank of England, the Chancellor's statement today that "it is better for the Government to hold on to Northern Rock for a temporary period" will be seen as a further sign of uncertainty and vacillation.

Shares will be suspended from tomorrow (Monday) and the nationalisation - the first in three decades - allows Government to appoint a panel to decide the level of compensation to award Northern Rock shareholders.

The news will be equally upsetting for both Northern Rock management and staff, and Virgin boss Richard Branson, both of who had prepared takeover bids for the ailing institution.

With upwards of £55,000,000,000 - yes, that's fifty five billion pounds - of British taxpayers' money thrown at the fiasco that is Northern Rock to shore up loans and guarantees, Chancellor Alistair Darling's pronouncement today must be about as welcome as a bacon sandwich at a barmitzvah.

The appointment of Ron Sandler, former boss at Lloyd's of London to head up the nationalised organisation, will doubtless instil confidence in shareholders who feel, in the words of BBC Business Editor Robert Peston, that they have been "fleeced".

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