Wednesday, 10 June 2009

Good news is no news

The Times says that the Treasury is looking at the options for selling - or privatising - Northern Rock. For the most part, its suggestion that a sale would be politically motivated looks fairly weak:
The Government is eager to sell Northern Rock to the private sector at a profit to prove to voters that Gordon Brown has overcome the financial crisis that brought the British banking system within hours of collapse.
However, Treasury insiders sought last night to dampen hopes that Northern Rock would be sold before the next general election. Ministers are understood to be cautious of selling the bank in the short term and want to ensure the best return
Treasury sources insisted last night that the Government was in no hurry to sell Northern Rock and was keen to leverage its control of the bank to extract substantial commitments to boost lending to the mortgage market.
Buried at the bottom of the story, we learn that:
The nationalised bank cut costs by reducing staff and has since been repaying the Government. By March this year Northern Rock was well ahead of target, owing a net balance of £8.9 billion on a loan that stood at £26.9 billion at the end of 2007.
Rather too much like good news to get widely reported, even if the scale of government exposure to the bank was once a very big issue.

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