Rebirth of England

For these institutions and consortiums interested in acquiring Northron Rock Bank, the government has made it clear that the acquisition offer needs to reflect their specific plans and timetable for assuming and repaying the British government's borrowings. Choose from these. the solution that most satisfies them.

It is estimated that the current market value of Northrock Bank has shrunk from more than 5.2 billion pounds in February this year to less than 360 million pounds now.

After all, Northrock Bank's own investment in subprime loan bonds (CDOs) is not high, only about 250 million pounds.

Therefore, in the subprime mortgage crisis, their losses were not that big. The reason why the run was triggered was because only about 25% of the loans issued by Northrock Bank came from their depositors, while up to 75% Funds are obtained through financial markets and interbank lending.

As mentioned before, the higher the proportion of funds from depositors in the loans issued by a bank, the smaller the risk of the bank. Therefore, when the bank develops to a certain level, some people will withdraw money and others will exist at the same time. Savings in banks are basically relatively stable, and the chance of a run is extremely small - the run on Northrock Bank was the first bank run in Britain in more than 150 years.

The funds from the financial market and lending are different. Generally speaking, it is equivalent to Northrock Bank borrowing funds from the financial market based on its own credibility, and then releasing these funds to provide loans to others. They Obtain the interest difference.

However, although this method allowed Northenroc Bank to achieve rapid development when the economy was booming, it was very sensitive to changes in interest rates. When the subprime mortgage crisis broke out, countries around the world began to increase loan interest rates to control housing loans. proportion, it will cause their liquidity to dry up.

At this time, if there is another run on savers, it will directly cause a credit crisis - savers' deposits have been loaned out, but due to the impact of the subprime mortgage crisis, many loans cannot be recovered for a while. Now savers have to withdraw their money. If you can't withdraw it, you will be completely out of business.

You must know that credit is very important in the banking or financial industry. Credit bankruptcy means that almost no one will do business with you, and you will naturally face real bankruptcy.

…

Today's London was shrouded in light rain. When Barron walked out of the DS Financial Center, he felt a damp chill in front of him.

Just now at the DS Financial Center, Barron discussed the acquisition of Northrock Bank with Standard Chartered Bank President Davis and others who came to London. Next, he is about to meet with Finance Minister Darling.

The convoy was already waiting at the entrance of DS Financial Center, and on both sides of the gate, bodyguards in black suits were watching the surroundings vigilantly.

Barron's personal assistant Wang Wanting held an umbrella to cover Barron's head and waited until he entered the black extended version of the Bentley Mulsanne. Wang Wanting closed the door and got into the car from the other side.

When the bodyguards gradually entered the Land Rover Defenders at the front and rear of the convoy, the convoy set off in the increasingly heavy rain, leaving only the halo of the car lights.

This meeting with Darling was a private meeting.

But at such a moment, the conversation between the two is destined to focus on the acquisition of Northrock Bank by a consortium formed by Standard Chartered Bank and DS Group.

Before Brown became Prime Minister, he served as Chancellor of the Exchequer, so it is obvious that Darling, who is now Chancellor of the Exchequer, must be Brown's "one of his own".

But even so, Darling still has his demands on the acquisition of Northrock Bank. It is impossible to say that he is unprincipled on Barron's side - at least if Standard Chartered Bank can win in the end, in the acquisition In terms of conditions, it definitely needs to be stronger than other competitors.

After all, in addition to the American consortium participating in the acquisition, Branson, the boss of Virgin Group, also has a lot of connections.

"The current acquisition conditions of various companies are still not satisfactory to us. Your Highness the Duke, as I said before, we need the acquirer to promise to repay the loan and interest provided by us within three years, and we need a guarantee Northrock Bank will no longer be a problem in the future.”

At the beginning, Darling said bluntly:

"If these acquisition conditions are not satisfactory to us, then eventually we will have to start the nationalization process of Northrock Bank."

As Finance Minister Darling said, the main demand of the Ministry of Finance he represents, or the British government, is that the interests of taxpayers must not be harmed first - this represents the 25 billion invested in Northron Rock Bank. The pounds sterling and interest need to be returned in the shortest possible time, and the time they require must not exceed three years.

Otherwise, if government funds are used to bail out banks and the funds are not recovered for a long time, the government will inevitably be criticized by the public.

Why is it required to be within three years?

Because three years later, in 2010, another British general election is coming, and they do not want this bailout of Northrock Bank to become a weapon used by the Conservative Party to attack them.

For Darling, he very much hopes to get suitable acquisition conditions for Northrock Bank to complete the privatization of the bank, so that the government can complete its own rescue work and get out unscathed.

But the bottom line is that those funds need to be recovered as soon as possible, and punitive interest must be paid, so that there can be an explanation to the public.

If they cannot accept those acquisition plans and have no other choice, they can only convert the funds they injected into bank shares and complete the nationalization of Northrock Bank. This can also be regarded as an explanation to the people - those The shareholders and managers who screwed up the bank would be evicted and the state would take over the bank.

Therefore, Darling told Barron that the nationalization of Northrock Bank he called was not only a threat, but also one of the very possible options.

Barron himself knew this, because in his previous life, Northron Rock Bank's acquisition plan could not be approved by the British government until February next year. In the end, they implemented a ban on the bank. nationalization.

It can also be seen from here how determined the British government, represented by Darling, is in dealing with Northrock Bank, and how difficult it is for the acquisition plan to be accepted by them.

According to Barron's knowledge, most of the institutions and consortiums participating in the bid for Northrock Bank will find it difficult to accept the requirement to repay up to 25 billion pounds of government debt and interest within three years.

One of the consortiums, led by the Virgin Group, is willing to immediately return 11 billion pounds of it after acquiring Northron Rock Bank. However, they need longer installments to repay the remaining government loans, otherwise it will be difficult to bear such a heavy burden. burden.

In fact, among competitors other than Standard Chartered Bank, Virgin Group’s acquisition conditions are already closest to the requirements of the British government.

Other competitors, those with the shortest time, can only promise to pay off the 25 billion pounds of debt and interest within five years...