# Shares in Northern Rock



## Elphaba (18 Feb 2008)

I placed a telephone deal a week ago for some share in Northern Rock and to my horror have discovered they are to be delisted. I placed order with computershare, rang to cancel but to my further horror I'm tied into the deal
and have to send on the funds. Anyone any advice. Im well aware shares go up as well as down, just never expected them to be delisted. I feel like a right wally.....


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## Marie (18 Feb 2008)

Your shares are now underwritten by the British government so I shouldn't worry.  It sounds as if N.R. will be 'shrunk' over the next three years as it grew too fast.  They will probably raise their interest-rates and sack staff with the intention of becoming viable again.  Personally I think the 'temporary nationalisation' of N.R. is absurd and ill-conceived but I'm not the Minister for Finance.  This is all to protect shareholders at the expense of the tax-paying public.  If you are a shareholder your interests are being protected - in the short-term anyhow.


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## Sunny (18 Feb 2008)

Elphaba said:


> I placed a telephone deal a week ago for some share in Northern Rock and to my horror have discovered they are to be delisted. I placed order with computershare, rang to cancel but to my further horror I'm tied into the deal
> and have to send on the funds. Anyone any advice. Im well aware shares go up as well as down, just never expected them to be delisted. I feel like a right wally.....


 
Sorry to say but I think you will just have to cross your fingers and hope the British Government give some value to shareholders. At least you bought them at a low price so your losses whould be limited *IF* the government gives something for the shares in compensation. Bad trade at a bad time!!


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## Sunny (18 Feb 2008)

Marie said:


> Your shares are now underwritten by the British government so I shouldn't worry. It sounds as if N.R. will be 'shrunk' over the next three years as it grew too fast. They will probably raise their interest-rates and sack staff with the intention of becoming viable again. Personally I think the 'temporary nationalisation' of N.R. is absurd and ill-conceived but I'm not the Minister for Finance. This is all to protect shareholders at the expense of the tax-paying public. If you are a shareholder your interests are being protected - in the short-term anyhow.


 
Completely wrong. Shareholders lose out by nationalisation. They are not protected. Shares at this moment are worth nothing until the Government decides how much if anything at all to pay out as compensation.


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## Buffett (18 Feb 2008)

Sunny said:


> Completely wrong. Shareholders lose out by nationalisation. They are not protected. Shares at this moment are worth nothing until the Government decides how much if anything at all to pay out as compensation.



Correct. The government done this to protect taxpayers NOT to protect shareholders. I would be surprised at any payout by the government of more than 25 pence per share


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## plant43 (18 Feb 2008)

And this isn't the first time they've done this. Shareholders in Railtrack lost out big time when the company was nationalised as Network Rail.


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## Elphaba (18 Feb 2008)

Thanks people, I'd imagine shareholders in the U.K. will put up a fight.  
I'd be very unhappy with anything less than 50p, bought them for 90p.
Monday morning is bad enough without a sharp reality check. Have to go to the bank to send on the funds or I'll have to pay a late payment fee and daily interest.


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## diarmuidc (18 Feb 2008)

Elphaba said:


> Thanks people, I'd imagine shareholders in the U.K. will put up a fight.


I don't see why the British tax payers should bailout the shareholders of a company (any further than they have already done) . Investing in Northern Rock last week (or anytime since October) was akin to playing roulette.


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## Sylvester3 (18 Feb 2008)

Has this nationalisation not been on the cards for a while though?


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## dunkamania (18 Feb 2008)

Nationalisation was a fallback option in case proprosed private equity bids failed.

Northern Rock is based in North England, so I would estimate a slightly higher payout for shareholders as a result of political fallout.


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## Buffett (18 Feb 2008)

dunkamania said:


> Nationalisation was a fallback option in case proprosed private equity bids failed.
> 
> Northern Rock is based in North England, so I would estimate a slightly higher payout for shareholders as a result of political fallout.



I would not count on a payout.


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## ClubMan (18 Feb 2008)

Maybe this key topic is of relevance here?!

Getting CGT loss relief on unsold shares

Wonder what  who suggested that buying _NR _shares last September/October/November was a good idea have to say now...?


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## Buffett (18 Feb 2008)

Elphaba said:


> Thanks people, I'd imagine shareholders in the U.K. will put up a fight.
> I'd be very unhappy with anything less than 50p, bought them for 90p.
> Monday morning is bad enough without a sharp reality check. Have to go to the bank to send on the funds or I'll have to pay a late payment fee and daily interest.



Elphaba, I dont want to sound mean, but what was going through your head when investing in these shares ?? Its crazy.
If you want to invest in stocks and make money, you need to trade over long-term (assuming you're a novice). I would suggest you do the following :-

1. Accept that you've probably lost your whole investment. Forget about a payout. 

2. Buy a book called "The Warren Buffett Way" and read it cover to cover. Then you`ll have the tools to select decent stocks.


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## PMU (18 Feb 2008)

Elphaba said:


> Anyone any advice.


  According to today’s London Times, http://business.timesonline.co.uk/t...ectors/banking_and_finance/article3386903.ece  a UK government-appointed administration panel will work out the amount (if any) of compensation to be given to shareholders.


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## John Rambo (18 Feb 2008)

An independent body will decide on what, if any, payment should be paid to shareholders. It will be negligible though. Like other posters I find your decision to buy shares last week and your shock at the British government's decision to nationalise a little bizarre to be honest. Sorry to hear you'll (probably) take a hit, but I suppose it'll be a lesson.


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## Elphaba (18 Feb 2008)

Yes, its a hard lesson alright, but who could have forseen that NR would be
nationalized. I bought them on the assumption Virgin would be taking them over. Was nationalization as a fallback option common knowledge???


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## ClubMan (18 Feb 2008)

Elphaba said:


> Yes, its a hard lesson alright, but who could have forseen that NR would be
> nationalized.


Just about anybody who had read a newspaper in recent weeks!


> Was nationalization as a fallback option common knowledge???


Yes!


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## Murt10 (18 Feb 2008)

Moneyweek has mentioned the possibilirt of nationalisation a couple of times.

[broken link removed]

Also click on the related stories.

I signed up for the free daily email with moneyweek and its not bad, some interesting articles. I was going to sign up for the magazine but they have made it very expensive to buy from hhere. I only wanted the onlone edition anyway.


Murt


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## diarmuidc (18 Feb 2008)

Elphaba said:


> Yes, its a hard lesson alright, but who could have forseen that NR would be
> nationalized.


Any one who reads  The Economist  (and again, ). I assume plenty of other publications were predicting the same.


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## John Rambo (18 Feb 2008)

Elphaba said:


> Yes, its a hard lesson alright, but who could have forseen that NR would be
> nationalized. I bought them on the assumption Virgin would be taking them over. Was nationalization as a fallback option common knowledge???


 
Absolutely...because Virgin were rumoured struggling to raise the necessary funds and the price would have been low anyway because of the turmoil in the markets. Seriously, you shouldn't be investing in shares without doing your homework or paying someone to do it for you. That's madness.


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## TSThomas (18 Feb 2008)

Nationalisation's been bandied about for many months. Some weeks back the government even announced who'd take charge in the event it did happen.


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## Elphaba (18 Feb 2008)

Oops, I cant believe I missed all that, and I read the economist! I thought nationalization belonged to the Margaret Thatcher days, the word was not in my lexicon. I will put this one down to experience. I'm bowed but not beaten.
but will def. be more cautious in future.


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## Gautama (18 Feb 2008)

Buffett said:


> Correct. The government done this to protect taxpayers NOT to protect shareholders. I would be surprised at any payout by the government of more than 25 pence per share


 
I heard on Sunday that the UK government were expected to buy the shares at around the £0.50 mark.  Think NR were at £0.90 late last week, down from a high of £12.00+ last year.


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## Elphaba (18 Feb 2008)

I think Jeff Randall, shareholders lawyer will look for more than that!


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## Brendan Burgess (18 Feb 2008)

Elphaba said:



> I thought nationalization belonged to the Margaret Thatcher days



I think you might be mixing up nationalization with privatization. 

Are you reading the Tsimonoce ? It's a great magazine, but it gets things back to front a lot.

Brendan


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## Duffman (19 Feb 2008)

I have to own up myself and admit that I also bought shares a few weeks back believing that the bank would be sold & the shares would rise.  I am normally good on buying shares & up to now have only bought a diversified portfolio for the long term.  All I can say is that greed got the better of me & I can safely say 'never again'.  Thankfully I didn't invest too much.
One question I have though - I bought the shares on line with Goodbodies.  My question is - if there is compensation, how will that be paid out?  Will my shares simply be cancelled & the compensation credited to my account?  Has anyone heard of a similar situation?


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## Elphaba (19 Feb 2008)

Brendan said:


> Elphaba said:
> 
> I think you might be mixing up nationalization with privatization.
> 
> ...



A bit like the Gordon Brown & Alistair Darling. Margaret Thatcher was responsible for privatizing nationalized companies. Now its the other way around. I'm not the only one with shares in N. Rock or the only one whos lost out in recent times...


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## rmelly (19 Feb 2008)

Elphaba said:


> privatizing nationalized companies.


 
Not true - this comment would suggest the companies started private, were at some point nationalised, then later were privatised.

As early as the week before last there were mumblings that the management & Virgin offers weren't acceptable by a LONG way...plus common sense would say that a private company getting the benefit while the government took the risk was never going to happen here.

As for Shareholder power - they will lose any court case because they are ultimately in the wrong, and anyone who bought in since the 'Run on the Bank' - for example the 2 private equity funds, are vultures attempting to take advantage of the British Governents propping the bank up and have no right to expect to profit or even break even.


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## Elphaba (19 Feb 2008)

rmelly said:


> Not true - this comment would suggest the companies started private, were at some point nationalised, then later were privatised.
> 
> As early as the week before last there were mumblings that the management & Virgin offers weren't acceptable by a LONG way...plus common sense would say that a private company getting the benefit while the government took the risk was never going to happen here.
> 
> As for Shareholder power - they will lose any court case because they are ultimately in the wrong, and anyone who bought in since the 'Run on the Bank' - for example the 2 private equity funds, are vultures attempting to take advantage of the British Governents propping the bank up and have no right to expect to profit or even break even.



Why complicate a simple fact. M. thatcher & conservative led government privatized government owned industries.

When British government bailed out NR, share trading should have been suspended immediately. All been handled very badly. Government could still decide to make a payment to shareholders in order to avoid a repeat of the long drawn out legal battle it faced when rail infrastructure group Railtrack went into administration in 2001


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## Murt10 (21 Feb 2008)

Bad news. 

From todays Indo

Whitehall ties hands of Rock's independent share valuer
By Sean Farrell 

THE British government has tied the hands of the independent valuer of Northern Rock's shares by laying down strict terms in draft legislation that went before British parliament yesterday. 

The UK Treasury wants to head off shareholder litigation by getting an independent valuation of Northern Rock's shares which it would use if investors in the stricken bank sued for higher compensation. 

The compensation scheme order for Northern Rock stated: "In determining the amount of any compensation payable by the Treasury to any person . . . it must be assumed . . . that Northern Rock is unable to continue as a going concern and is in administration." .........


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## Buffett (21 Feb 2008)

Duffman said:


> My question is - if there is compensation, how will that be paid out?  Will my shares simply be cancelled & the compensation credited to my account?  Has anyone heard of a similar situation?



Looks like you wont need to worry about the answer to this now


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## Duffman (21 Feb 2008)

Buffett said:


> Looks like you wont need to worry about the answer to this now


 
I'm not complaining - I bought in late as I said, although I had planned to keep the shares for the medium to long term as I genuinely believed in a private sale. You live & learn.  However it does seem harsh on many small shareholders for whom this was their first (& maybe only) foray into share buying & may have depended on the money for their retirement etc.  Personally I think they should be compensated at least.


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## ClubMan (21 Feb 2008)

Duffman said:


> However it does seem harsh on many small shareholders for whom this was their first (& maybe only) foray into share buying & may have depended on the money for their retirement etc.  Personally I think they should be compensated at least.


You are joking, right? 

Why not get onto _FG _- they wanted to compensate _eircom _shareholders for their losses at one stage if I recall correctly.


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## Buffett (21 Feb 2008)

Duffman said:


> However it does seem harsh on many small shareholders for whom this was their first (& maybe only) foray into share buying & may have depended on the money for their retirement etc.  Personally I think they should be compensated at least.



This is what happens to people when they dont do their research and dabble in things (stocks etc ..) that they dont understand ...


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## stir crazy (21 Feb 2008)

Duffman said:


> I'm not complaining - I bought in late as I said, although I had planned to keep the shares for the medium to long term as I genuinely believed in a private sale. You live & learn.  However it does seem harsh on many small shareholders for whom this was their first (& maybe only) foray into share buying & may have depended on the money for their retirement etc.  Personally I think they should be compensated at least.



Surely the vast majority of Irish learned enough of a lesson from the eircom flotation to know that the future of a company and its share price isnt' based upon what you were 'hoping'  at the time of purchase ?


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## Duffman (22 Feb 2008)

ClubMan said:


> You are joking, right?
> 
> Why not get onto _FG _- they wanted to compensate _eircom _shareholders for their losses at one stage if I recall correctly.


 
No I'm not joking.  A lot of people got the shares (admittedly for free) when NR was demutualised & knew nothing about the stock market.  They held on to them as they would have if it was money for retirement.  But I wonder how many of them were advised by the 'experts' to sell?


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## Duffman (22 Feb 2008)

Buffett said:


> This is what happens to people when they dont do their research and dabble in things (stocks etc ..) that they dont understand ...


 
See above reply


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## ClubMan (22 Feb 2008)

Duffman said:


> No I'm not joking.  A lot of people got the shares (admittedly for free) when NR was demutualised & knew nothing about the stock market.  They held on to them as they would have if it was money for retirement.  But I wonder how many of them were advised by the 'experts' to sell?


Sorry - I still fail to see why ignorance (in some cases) merits compensation. I would imagine that few people in this day and age are unaware of at least some of the risks/potential pitfalls involved in investing in shares. Both here in _Ireland _especially post _eircom_, in the _UK _after their more extensive experience of demutualisations and privatisations and more generally anywhere post _Enron _etc. I doubt that there are too many innocents abroad who have absolutely no appreciation of what can happen.


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## Duffman (22 Feb 2008)

stir crazy said:


> Surely the vast majority of Irish learned enough of a lesson from the eircom flotation to know that the future of a company and its share price isnt' based upon what you were 'hoping' at the time of purchase ?


 
I'm afraid I didn't learn from the eircom flotation - I didn't buy in the first place as I didn't see them at the time as value for money (despite all the advise from the 'experts' - some of whom suggested borrowing to buy shares).  Still I lost on NR - you win some & you lose some.  My philosophy is that you should only directly invest in shares with money you can afford to lose.  As long as I'm up overall I'm happy.


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## ClubMan (22 Feb 2008)

Duffman said:


> I'm afraid I didn't learn from the eircom flotation - I didn't buy in the first place


You don't have to have participated to have learned lessons from this. The newspaper coverage was so extensive surely few if any people were unaware of the issues. Of course for some people the lesson learned was "never invest in shares" which many would argue was not really the point.


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## Duffman (22 Feb 2008)

ClubMan said:


> Sorry - I still fail to see why ignorance (in some cases) merits compensation. I would imagine that few people in this day and age are unaware of some of the risks involved in investing in shares. Here in _Ireland _especially post _eircom_, in the _UK _after their more extensive experience of demutualisations and privatisations and generally post _Enron _etc. I doubt that there are too many innocents abroad who have absolutely no appreciation of what can happen.


 
I disagree - I would say that MOST people don't have a clue of the stock market and yet have a lot of their savings indirectly invested in shares through a variety of investments - e.g. pensions.  It seems as though the only way to avoid investing in the stock market today is to stick in under your matress.


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## ClubMan (22 Feb 2008)

Duffman said:


> I disagree - I would say that MOST people don't have a clue of the stock market


OK - we'll just have to disagree so.


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## Buffett (22 Feb 2008)

Duffman said:


> My philosophy is that you should only directly invest in shares with money you can afford to lose.



No disrespect to you but this phase is common from most people when you mention the stock market to them. A lot of people view stocks as a game of roulette or the like and spout out this stupid phrase out of ignorance.

Investing in stocks is not risky if you put in the research and realize that your not buying a stock but buying a share in a business.


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## Duffman (22 Feb 2008)

Buffett said:


> No disrespect to you but this phase is common from most people when you mention the stock market to them. A lot of people view stocks as a game of roulette or the like and spout out this stupid phrase out of ignorance.
> 
> Investing in stocks is not risky if you put in the research and realize that your not buying a stock but buying a share in a business.


 
So you've never lost money on the stock market?  Whats your secret?  To say that investing in stocks is not risky is stretching it a bit.  I remember discussions on this board several months ago explaining why Northern Rock is a big company & was a safe bet, either for shares or deposits.  I believe the same was also said of Eircom at the time.  Bottom line, there are risks involved.  Either small risks = small gains/losses OR big risks = big gains/losses.  The roulette analogy is not that stupid in fact.  If you were to study the stock market, many of the ups & downs in share prices are vastly exaggerated and not at all reflective of the worth of a company.


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## soy (22 Feb 2008)

Duffman said:


> Northern Rock is a big company & was a safe bet, either for shares .



I do not recall any such post. Individual shares are not discussed on AAM so such comments would have been deleted.
It is true that many post stated NR was a big company and safe for deposits. However this is still true.

On a final note - purchasing shares in NR in the past 6 months was always a high risk gamble with either big gains/losses the likely outcome.


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## Duffman (22 Feb 2008)

soy said:


> I do not recall any such post. Individual shares are not discussed on AAM so such comments would have been deleted.
> It is true that many post stated NR was a big company and safe for deposits. However this is still true.


You may be right about the discussion of the share price, but I do remember the discussion on how safe NR were as a company - something that has proven to be incorrect so my point is still valid - every share has an element of risk. How many people saw NR being nationalised a few months ago?


soy said:


> On a final note - purchasing shares in NR in the past 6 months was always a high risk gamble with either big gains/losses the likely outcome.


Correct - its people who bought them before that I have some sympathy for - but obviously not everyone agrees.


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## John Rambo (22 Feb 2008)

Duffman said:


> You may be right about the discussion of the share price, but I do remember the discussion on how safe NR were as a company - something that has proven to be incorrect so my point is still valid - every share has an element of risk. How many people saw NR being nationalised a few months ago?
> 
> Correct - its people who bought them before that I have some sympathy for - but obviously not everyone agrees.


 
Nobody ever said it was safe to buy shares...the OP bought shares recently which was a huge risk and he/she obviously had done no research as they weren't aware nationalisation was a possibility. The safety discussion you're referring to was the safety of deposits which were protected to a certain level and which are now fully protected.


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