Time to purchase shares in Northern Rock?

Financial Analysts are warning investors not to use the current turbulence in the markets and the problems at Northern Rock as a potential buying opportunity.

A spokesperson for Baring Asset Management said that it is likely that Northern Rock will be taken over but nobody is aware of how much it will be purchased for. The group believes that it is best to stay clear for the moment.

Williams de Broë said Northern Rock is a weak hold. Prospective buyers need to be aware that they are taking a gamble and the outlook is uncertain.

It is believed that the current value of Northern Rock’s mortgage book is 180p a share, indicating that any offer would need to value Northern Rock at more than 200p a share to gain shareholder approval. Shareholders could be forced to sell for less than the price they bought at if and when a hostile bidder materialises.

Both Barclays and Lloyds TSB are rumoured to be in talks to take over the struggling bank not long before it approached the Bank of England for an emergency loan, however, reportedly there are no such talks in progress.

However, an independent financial adviser at Paradigm Norton, has decided to purchase some stock although they admitted it was a gamble.

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