Is Branson getting the Rock for free?

Is Branson getting the Rock for free?

www.dailymail.co.uk

Headline p21 of todays 29/11 Daily Mail. "Is Branson getting the Rock for free? Virgin can raid state bank's cash to fund deal"

Apparently banks have to have a buffer fund, which seems to be at "10% of their loan book". Northern Rock had a fund of 30% and Virgin is pledging to keep that at 15%, 5% more than that stipulated by the FSA (Financial Services Authority)

But it seems that £250 million could be released with a further "£345 m if the ratio was cut even further"

(visit the link for the full news article)

I am not that good with figures, and do not fully understand what the paper is saying, nor why it is relegated to page 21.

On the face of it, it is a super deal for Virgin and one almost anyone could have done if the figures are correct, I even think the payment was in the form of an IOU!

It just beggars belief, the tax payer pays out, gets half back and the bank is given away without even the bad bit. And there are companies struggling to raise a few thousand to improve sales and drag this useless country out of the mire bankers and politicians got us into.

Or am I wrong?

www.dailymail.co.uk
(visit the link for the full news article)

Good vid on the situation:

It would seem that Northern Rocks Loan book (amount it has lent) is around 2.5billion and government regulations stipulate banks must hold a minimum of 10% ie 250million. However it had actually held back 750million (30%) in cash. By dropping the cash it holds from 30% to 15% Virgin can extract 375million. By dropping cash holdings from 15% to 10% it can extract a further 175million.

So "economically aware" (cough hysterically) government sells an asset for 747million which has 750million in cash in the bank!!!!!!!!!!!!!!!!!!!!!!!

At least 250million MUST be kept in cash but it means that Virgin has effectively purchased Northern rock for 247million cash (but holds more within the bank!). We the people ie taxpayers bought Northern Rock for 1.4BILLION to save it from collapse. Guess where the 750million cash holding came from !!!!!!!!!!!!!!!!!

The Tories are giving away more money to its banking pals than it is attempting to save by cutting back on public sector pensions.

And you wonder why people get a bit p...ssed off!!!!!!!!!!!!!!!!!!!!!!!!!!

Some people will say Osbourne is a moron but they are wrong he is doing exactly what he always planned to do and ideologically believes in. The only morons in this fiasco are the lib dems and those who can't see what is going on.

I am not a citizen of your country, but in my country the monetary policy is set by the central bankers... not the government. And what you describe is what we call "fractional reserve lending" - it is the reason Banks pretty much own and run the world. They can lend money they don't have.... and then claim the money they lent you is part of their "holdings." A vicious cylcle which allows them to control the value of your currency, the amopunt of it in circulation, (and who gets to have it.)

Sounds like the usual grand robber baron scam working as it has for the last couple of centuries.....

reply to post by Maxmars


AFAIK the amount kept in reserve is usually a matter of law or rules set by the Govt as part of economic policy - not by bankers themselves - I can recall back in the 70's or 80's that changes weer sometimes made in the ratio for some reason or other, and it was usually big news.

Wiki article on regulation of fractional reserve banking

Of course all this "non-existant" money is what has allowed the vast increase in wealth since WW2- having money to lend to startups, entrepeneurs, etc. Without it we would still be using what we now consider to be "old" technology, with attendant drop in living standards.