Pressure on Government to nationalise Northern Rock

One of the Northern Rock’s major shareholders, hedge fund RAB Capital, has increased its shareholding to 7.59% ahead of a shareholder meeting on 15 January over asset sales and share issues. RAB paid just under £30,000 for 350,000 Rock shares on 31 December.

Northern Rock hit problems back in September when it was forced to seek emergency funding from the Bank of England after failing to borrow from other banks in the wholesale markets.

So far, it is estimated to have borrowed at least £26 billion, with UK taxpayers facing a liability of about £57 billion as pressure mounts on the Government to nationalise the bank.

Some politicians and analysts believe nationalisation of the bank or some form of public administration may be the best option but last month, the British Bankers Association (BBA) said the possibility of the firm being nationalised was not ‘a happy proposition’.

The future of the bank is still being decided and so far, there are 2 proposals for the bank who include a consortium led by Sir Richard Branson’s Virgin Group and Olivant, run by Luqman Arnold, former Abbey chief executive.

Late last year, Northern Rock dropped out of the FTSE 100 but following the news, shares edged 0.25p higher to 84.25p.

Discuss this in the Finance Markets forums

Story link: Pressure on Government to nationalise Northern Rock