NRSAG

Rothschild Report (2015)

The UK government commissioned an independent report from financial advisers Rothschild on the eventual cost of the bank bailouts.

The results from this report are summarised in this table, which shows a huge surplus of £9.6 billion from UK Asset Resolution. UKAR includes Bradford & Bingley assets, but our view is that the positive net balance is due to the quality of assets in Northern Rock. 
Rothschild Report

OBR Report (2015)

The Office for Budget Responsibility published a report at a similar time to the Rothschild Report, which showed the taxpayer would  realise an overall cash surplus of £13.3 billion from all bank interventions. 

The report showed a cash surplus of £10.6 billion from the holdings in Bradford & Bingley and Northern Rock Asset Management plc. Interestingly, this figure is similar to the implied loss from RBS of £10.4 billion. The Government ensured RBS shareholders retained interest in the bank whereas NR shareholders were completely wiped out. This is a classic example of "Robbing Peter to pay Paul."

The OBR made overall deductions of £23.6 billion for Exchequer financing, which is believed to be a debt interest cost. We're unsure why this figure was deducted as its profit. The Rothschild report also accounted for debt interest. 

NR paid HMG loans back at a penal rate of interest. 
OBR Report (2015)

In response to the reports above, a Treasury spokesman made the following statement:


“The methodology used by Rothschild is the same as that used by the independent Office of Budget Responsibility in their analysis of the government’s interventions in the banking sector, and by the US Treasury.
“The Rothschild report clearly sets out that taxpayers can expect to get back £14 billion more than they put into the banks, if you take into account the sales the government has authorised so far, the fees the government has received, the outstanding payments, and the value of the remaining shares.”

OBR Report (2021)

The OBR showed a cash surplus of £16.9 billion from the holdings in Bradford & Bingley and Northern Rock Asset Management plc in a report published in 2021. 

Again, the OBR made overall deductions for exchequer financing, this time a deduction of £14.5 billion was applied to UKAR. 

We're unsure why this figure was deducted as its profit. The Rothschild report also accounted for debt interest. 
OBR Report (2021)

The share price chart above shows the clear connection between the BBC leak of NR requesting funds from the Bank of England as lender of last resort, to the decline in share price as a result of customer withdrawals, that worsened the situation for the bank. The illustration below shows £15.3 billion was withdrawn from NR bank accounts as a result of the leak.

Also, the leak by Robert Peston prevented the Board from raising funds from shareholders.
The failure of HBOS plc

HBOS failure

The failure of HBOS is detailed in the report above. There was clear contradiction in the way the Government dealt with the situation at Northern Rock compared with HBOS. 
Northern Rock was taken over by the Government for ZERO compensation because HMG refused to provide guarantees and assurances to private bidders. 
HBOS was sold to Lloyds for the equivalent of 0.83 Lloyds shares for each HBOS share, equivalent to 232p per share, which equated to more than £12.2 billion. The price was later altered to 0.605 Lloyds shares per HBOS share. The deal was brokered by then Prime Minister, Gordon Brown.
To avoid another Northern Rock-style collapse, HMG allowed the takeover to bypass competition law.