Well, well, well. Another development in the ongoing saga of my former employer, Northern Rock.

Before we dive in, let’s have a quick refresher.

The Rock owes the Bank of England rather a lot of money (£27 billion). They’ve also got the European Commission on their back. It’s bad form, in a private market such as banking, to have one player who’s backed by a government. It’s just not cricket.

All of which goes to explain the following extract from the Rock’s website:

As you may be aware, one of our primary business objectives is to repay the Bank of England loan, as quickly as possible. We aim to achieve this over the next three to four years, through the creation of a smaller, more focused, financially viable mortgage and savings bank, which will ultimately be returned to the private sector.

Today we see another mini milestone on the road to the Rock becoming “a smaller, more focused” operation.

A lot of Rock mortgage customers are coming to the end of fixed rate deals. Ordinarily, lenders are keen to retain business, and it’s often easier for borrowers to remortgage with the same bank. But, of course, the Rock is in the process of creating “a smaller, more focused, financially viable mortgage and savings bank”.

So a metaphorical gangplank has been erected between the Rock and the good ship Lloyds TSB. Rock customers coming off fixed deals will be able to switch to Lloyds. If they don’t like that, they can try and find a deal they like in the wider market. Or they can stay with the Rock, but at much higher rates.

Our research director Theo Casey explains the deal with the aid of a handy six-point plan:

1. Northern Rock customers will receive Lloyds’ pamphlets and brochures on various mortgage deals.
2. Customer chooses the one they like and calls the Rock.
3. The Rock tells customer how much it’ll cost.
4. Customer says yes.
5. Lloyds TSB checks customer credit, gives thumbs up or thumbs down, and sends off the contract.
6. Customer signs contract. Bang!

“Can you believe it?” he asks. “The Government’s five-year-plan to halve Northern Rock’s mortgage book is spoon-feeding up to 180,000 customers to Lloyds!”

All well and good for Lloyds. But where does it leave Northern Rock, a bank which we’re all underwriting through our taxes?

Not in a happy place, I’m sorry to say. It all comes down to Point 5. Lloyds (quite reasonably) has the power to prevent bad business coming onto its mortgage book. It seems fairly obvious that it will.

So there’s a very realistic prospect that “our bank” will end up losing our best customers, while retaining the bad.

Add in the fact that the European Commission wants the Rock to speed up the process. That means there’s a great likelihood that too much profitable business will be lost before the Rock’s management can create a “financially viable” institution. Which in turn decreases the likelihood of the Rock ever being returned to the private sector.

We’ve been sold a dummy. The Government knocked up a plan that I’m convinced, in the fullness of time, will prove to be totally unworkable.

But by then this shower won’t be around to take the flak, will they?

And this week’s award for least surprising news goes to…

The Bank of England’s Monetary Policy Committee. It left rates on hold at 5% this lunchtime.

While the last two decisions generated a bit of interest, in a will-they-won’t-they sort of a way, this one was a foregone conclusion. Even I didn’t mention it yesterday, and I love this sort of thing.

Now we’ve got a whole new month to watch the next round of the Data Fight — that interminable process by which we see obscure reports competing for column inches and the attentions of policymakers.

One day we’ll see headlines of the “Oh My God, We’re Having A Recession!” variety, while the next we’ll see “Blimey! Inflation!”

What’s a Bank of England to do? For today, nothing, which was probably sensible.

Next month? Well, they’re gonna wait and see which kind of bad data comes out on top in Round June.

The story behind the story of the commodities boom

“We’re in a population bubble,” writes a reader. “If we wait for Mother Nature to reduce our population she will not do so very kindly. Better that we reduce our numbers ourselves.”

Garry White completely agrees. “Population,” he once told me, “Is the elephant in the room. It’s driving the markets, it’s the reason for the food crisis — yet politicians are scared to talk about it.”

For Garry, population growth is the ‘story-behind-the-story’ when it comes to explaining the boom in commodities. It’s not just that there are more people. It’s also the fact that many of them are richer, and therefore consume more.

Unlike many commentators, Garry doesn’t believe we’ll see a catastrophe in food… at least not imminently.

However, he does believe there’ll be a squeeze on one particular commodity — and it’s the most vital commodity of all…

“A pay-off bigger than we ever imagined!”

Manraaj Singh came bouncing into this morning’s meeting. He stood at the head of the table, a gleam in his eye, and waited for a hush to descend. Then, with a twirl of his moustache, he announced his big news.

“My copper play,” he said, “is on the verge of a huge pay-off. This is the Big One!”

It’s no wonder he’s pleased! Manraaj’s play is up 110% since recommendation. (Past performance is not a reliable indicator of future results).

Not only that, but Manraaj tells me he’s looking at ANOTHER great copper investment in a different part of the world. .

And this one sounds like it could be even better. Because it not only offers exposure to copper, but also to another mineral — one of the most versatile minerals in the world!

Find out what you need to do right now to get in on the ground floor of Manraaj’s latest emerging market investment.

Until tomorrow

Ben Traynor

Source: Lloyds TSB To Grab Northern Rock’s Best Customers