Brown glossed over Northern Rock exposure

When Prime Minister Brown told the world’s press on February 18 a profit
could be made from the sale of the
Northern Rock business after
financial markets recovered, his own financial advisers had ruled this out days

Goldman Sachs, which was advising the Treasury on its options for Northern
Rock, had already told ministers that a loss of £450m was the ‘best-case
scenario’ and that a loss of £1.28bn was the most realistic ‘base case
scenario’, according to The Sunday Times.

The figures were revealed by John Kingman, senior Treasury official in charge
of Northern Rock, in written evidence submitted to a judicial review into the
decision to nationalise the lender.

The new documents are the first indication the government believes it could
lose money on the sale. Kingman’s evidence states: ‘under none of the scenarios
was it contemplated that the government would, taking this subsidy into account,
make a net profit from taking Northern Rock into the public sector.’

Further reading:

Lib Dems blast PwC’s Northern Rock audit

PwC red flags Northern Rock ‘uncertainty’

The Sunday Times story

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