Northern Rock is back in profit-amounting to about 200 million pounds-though a bit that is disguised with the dissolution of the Bank into two separate entities.
The swing from loss to profit in the last six months looks pretty impressive: extracting the one-offs, the Rock made a loss in the second half of last year of more than 100 million pounds.
But there is a paradox. Is Northern Rock Asset Management, the so-called bad Bank-the £ 50bn holds bits of mortgages and it is not going to be privatised--who has made a healthy profit of 350 million pounds.
Is the new Bank, Northern Rock plc, what must be privatised, which suffered losses of 143 million pounds--because it is not sufficient to cover the loan interest to pay out on deposits and other funds.
What these results tell us?
First, that the mortgage loans are worse at a slower pace, even if it is striking that there was still a drop in the number of mortgage borrowers, which are lagging behind: slightly increased the number of accounts of residential mortgages where the borrower is more than three months behind with payments, to 22,564 22,837, until by the end of 2009.
As regards the loss on so-called impaired loans, which was £ 278 million Asset Management and an insignificant £ 0. 4 m to Rock plc, compared with £ 1bn throughout 2009.
Secondly, there is an excellent chance that the taxpayer will make a profit when all those mortgages Rock finally reimbursed over the next decade or more.
And this process of liquidation will be quite something, after just under £ 50bn of buy-to-let and other loans from Bradford & Bingley-other nationalised Bank mortgage are crunched in Asset Management in the autumn.
In case you hadn't noticed, the Government has become a good player in distressed debt market, with a book lending in runoff of approximately £ 100bn, financed by loans from the taxpayer around £ 50bn (although, of course, most of the loans granted by B & B and the Rock would count as poor quality or anxious).
Finally, Rock plc is a bank very immature, with £ 6bn 17 stores only £ 11. funding 2bn mortgage.
As is, with limited and 76 branches, is more annoying than a flea in a fierce tiger in competitive struggle against elephantine Lloyds, Barclays, HSBC, RBS and Santander.
If the Government wants to promote competition in the market for retail banking, which is what it claims, is going to think creatively how to privatize the rock.
Certainly cannot be launched on the stock market in its current form underdeveloped. And it is evident that conventional auction over the next few months would maximize the return for taxpayers-since competition authorities would likely block bids from all the great players and offerings from the smaller players would be negligible.
That said, the twin goals of providing a fat profit for the State and by stimulating competition in the banking sector can be achieved if Rock plc can somehow be put into an arranged marriage with 600 branches--who have 4.6% market share in retail banking-that are sold (under duress) Lloyds.
If businesses and Clydesdale, owned by the National Bank of Australia may also be included in the rock, would be born a new Bank potentially significant.
To be clear, mergers of banks are ferociously complicated, because their computer systems and cultures are typically incompatible. But if George Osborne, Chancellor, wants to be faithful to his ambition to create true choice in banking for British consumers, it's going to have to be imaginative in how he sells the rock-and ignore the allure alluring fast buck.
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