Northern Rock Talks Dampen

Northern Rock has today put a dampener on renewed takoever hopes from the Virgin-led consortium, saying that negotiations with potential buyers are still within their early stages, thwarting the promise of a quick sell-off of the troubled bank.

The news saw a drop in Northern Rock share prices on the London Stock Exchange wiping much of last weeks share value gains, with investors losing confidence in the promise of advancing takeover talks that played up towards the end of last week with Virgin poised to make an offer for the majority shareholding.

Northern Rock has found itself very much in the media spotlight over the last few weeks, after severe liquidity shortages left it begging the Bank of England for emergency support, and led to a run on local branches as account holders sought to withdraw their balances.

With liquidity shortages only made worse, the bank has been almost entirely dependent on support from the UK central bank over the last few weeks, putting political pressure on both sides to help ensure a smooth transition within the private sector.

As a result of these circumstances its depressed share value in relation to the asset value of the company books have made it an attractive investment prospect, presently bringing in offers from equity group JC Flowers and a Virgin-led consortium including AIG insurance. However today’s announcement would imply that neither suitor is making substantial inroads towards the acquisition at the present time.

However it is expected that one party will table a bid soon, with Northern Rock still boasting a significant asset portfolio.

The Virgin bid will see Northern Rock rebranded under the Virgin umbrella, yet the consortium have promised to maintain the majority of staff positions over the acquisition, as well as the Northern Rock charitable sister foundation.

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