Scorched on the Rock

by Stephen Tall on August 5, 2009

Yesterday Northern Rock – taken into public ownership 18 months ago – posted its figures for the first six months of the year. They made for eye-watering reading:

Nationalised bank Northern Rock made a pre-tax loss of £724m for the first six months of the year as its bad debts tripled. The Newcastle-based firm wrote off £602m in bad loans and expects that figure to be similar in the second half of 2009.

The bank revealed that 6.4% of Together mortgages – the 125% loan-to-value product now withdrawn – are more than three months in arrears, up from 2.14% a year ago. Almost 40% of homeowners who took out a Together mortgage now find themselves in negative equity. Some 3,667 homes have fallen into arrears by more than a year without being repossessed. Northern Rock said this was a sign it was sympathetic towards struggling borrowers but critics doubt that the bank would recoup its losses at auction in any case.

The bank, which was taken into public ownership in February 2008, also warned that it would lend less in 2009 than it had previously forecast.

Lib Dem deputy leader Vince Cable, writing in today’s Sun (and, yes, you read that right: a Lib Dem invited to write for The Sun), is scathing:

The question the taxpayer is asking is: when do we get our money back? Vast amounts of public money were invested in the bank to save it from collapse. That is why I and the Liberal Democrats argued it had to be nationalised: to safeguard this money.

I worry now that the government is in such a rush to sell off the bank again that it will get a basement price. Britain’s banks and bankers let the country down very badly. We are now getting sight of the sixe of the bill.