http://news.bbc.co.uk/2/hi/business/7250023.stmThe prime minister said that the government had considered two offers from private sector buyers for Northern Rock, but decided not to accept them.
"We will have and always will put the interests of taxpayers first," he said.
When asked about the prospect of job cuts at the bank, the prime minister said: "If we hadn't intervened in August it would have gone under, we ensured an existence for the company.
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Check this blog
http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/02/rock_risk_doubled.htmlFirst, neither the Virgin consortium nor a management team were offering as much as the Treasury wanted in fees for tens of billions of pounds of continuing taxpayer support.
I am told there was a £40m gap between what Virgin said it could afford to pay and what the Treasury was demanding, which is big as an absolute number but is peanuts in the context of the Rock’s £110bn balance sheet.
Second, the Treasury was unhappy that Virgin and its co-investors would have made a profit of about £1.2bn – a return of around 75% – before taxpayers received a penny in capital gains for all the financial help we would have been giving.So although an ultimate profit of about £200m to taxpayers – which is what Virgin thought it could deliver – may seem attractive, the Treasury thought it inadequate give the scale of the risks that would have been shouldered by the Exchequer on behalf of us all.
The prime minister has in the end decided that if taxpayers are going to provide financial support to the Rock for years to come – which we would have done, on the basis of either of the rescue plans on the table – then we deserve all the potential rewards."It was the best decision to protect depositors, mortgages holders and employees of Northern Rock."
Very, very interesting. This should sound the death knell for the neo-liberal economics fanatics.
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