In a surprise move, the British government has nationalized the Northern Rock Building Society (link to FT article). A building society is like a savings and loan, but it is basically a bank now. Northern Rock had grown aggressively through a practice of making loans and funding them in the commercial paper market. With the subprime collapse they got hit on both sides of the balance sheet.
There had been some talk of a buyout by Virgin. But according to the Government, the numbers didn't add up. Apparently the shareholders didn't agree with this. Their shares were trading for 90p (about $2) and will now be worthless.
This is the first nationalization of a bank for 25 years or so. But the Northern Rock was the first British bank in 100 years to suffer a bank run.
A Finance Professor's blog. I am a Professor of Finance in the Poole College of Management at NC State University. My website: https://sites.google.com/ncsu.edu/warr Opinions are my own.
Subscribe to:
Post Comments (Atom)
What's going on with inflation?
I recently posted an article on the Poole College Thought Leadership page titled: " What's going on with inflation?" . This w...
-
A recent paper by some computer science folks at Indiana finds that the mood on twitter can predict movements in the Dow Jones Industrial A...
-
I recently posted an article on the Poole College Thought Leadership page titled: " What's going on with inflation?" . This w...
-
Another inflation illusion post. This time with math. Again the issue here is that you can't just increase the discount rate when you a...
No comments:
Post a Comment