February 2008 was a bad month to buy a bank, even if the purchase price was zero and you had £27bn of loans to protect. Given the slump in the housing market, the British government’s “investment” in Northern Rock, the mortgage lender it had to nationalise after a depositor run last summer, has performed as well as could be expected. The priority must still be to shrink Northern Rock’s balance sheet as fast as possible and reduce risk to taxpayers, rather than slow the decline in the hope that it will mean lower losses.

Northern Rock’s results for the first half of 2008 show a loss of £585m, leaving the bank with too little capital to support its balance sheet. With further losses expected, the Treasury will have to buy up to £3.4bn of new shares, Brussels permitting. That should be no surprise. A recapitalisation was certain, no matter who took the Rock over.