[NYTr] Bailed out by taxpayers, Brit bank raises dividend, continues CEO's huge salary

[All the News That Doesn't Fit]

[Hilarious! Thieves and knaves "advising" thieves and knaves. ]

Bailed out by taxpayers, bank raises dividend, 
continues CEO's huge salary

The Telegraph via GATA - September 25, 2007
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/25/cnrock125.xml


Anger as Northern Rock Plans Dividend

By Philip Aldrick and Harry Wallop 

The Government has hired investment bank Goldman Sachs to advise
it on options for Northern Rock amid fading hopes of a rescue and
growing anger at the beleaguered mortgage lender's decision to pay
shareholders a dividend.

Goldman was brought in after the Treasury guaranteed Northern Rock's
debts alongside savers' deposits. It will advise on implications
for taxpayers of any rescue plan, while considering alternative
scenarios and working through the detail of the guarantee.

For the time being, Goldman will take a back seat, leaving the
rescue plan to Merrill Lynch, which is advising Northern Rock's
board. Merrill Lynch is seeking a buyer, but banks appear to have
balked at the lender's potential L20 billion funding liability. The
shares fell a further 22 to 172p yesterday as bankers said a white
knight was unlikely to emerge.

Northern Rock's growing troubles have led to resentment that
shareholders will profit from the taxpayers' guarantee. The bank
plans to pay a L59 million dividend next month to everyone on the
share register this week, despite having drawn L2.9 billion from
the Bank of England's emergency facility just to keep the business
running.

Professor Andrew Clare at Cass Business School, said: "Had the
Government not stepped in, there would be no dividend and no company.
.. I'm sure it wasn't the Government's intention for the dividend
to be paid."

The Taxpayers' Alliance pressure group added that the payment set
"a very bad precedent."

A spokesman for the bank said: "We confirmed on September 14 that
the intention was to pay the dividend. If there is anything new to
announce on that then we would make that announcement."

Matt Ridley, Northern Rock chairman, also appeared to defend the
dividend policy in a letter sent to almost 100 MPs yesterday. He
wrote: "The board is well aware of its responsibility to its many
shareholders, including tens of thousands of small shareholders,
as well as to our largest shareholder, the charitable Northern Rock
Foundation. The board fully acknowledges its responsibilities and
stands ready to account for its actions."

The Prime Minister yesterday issued a thinly-veiled rebuke over
Adam Applegarth's L1.3 million pay. Gordon Brown told Radio 4's
Today programme: "A company doing badly cannot afford to pay its
executives exorbitant salaries or even high salaries."

Goldman Sachs' appointment is a clear signal that the Treasury is
ready to seize control of the lender. Bankers say if a buyer cannot
be found soon, the Treasury may wind up the bank, leaving shareholders
with nothing. They added the lender's L113 billion of mortgage
assets are unlikely to be sold as, at present prices, buyers would
demand a 5 percent discount that could mean a L5.65 billion loss.
With just L2.35 billion of net assets, the bank would then be
insolvent.

A Treasury spokesman said: "We do not comment on or disclose advice
provided by external advisers." Goldman Sachs declined to comment.

* * *

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