February 18, 2008
Northern Rocked
Northern Rock Nationalized as U.K. Rejects Virgin Bid
“British authorities have extended 55 billion pounds ($107 billion) in loans and guarantees to Northern Rock since September, when its credit lines dried up and triggered the first run on a U.K. bank in more than a century.
Chancellor of the Exchequer Alistair Darling wouldn’t discuss what the government’s purchase will be worth to shareholders. SRM and RAB have suggested they think the government will have to pay Northern Rock’s book value of around 4 pounds a share. The stock closed at 90 pence on Friday, valuing the company at 379 million pounds. Northern Rock shares will be suspended, and an independent panel will determine how to compensate shareholders.”
It was just about a year ago (February 6, 2007) when Northern Rock hit an all-time high of 1258 pence a share. It closed at 90 pence last Friday. That’s a 92.8% drop for those who don’t have a calculator handy. Be interesting to see what the common stockholders actually end up getting.
Related: All posts mentioning Northern Rock
February 18th, 2008 at 12:04 pm
Even more interesting to speculate which American bank will be next. There are plenty to choose from, Citi, WAMU, DSL, NCC… The US banks have even more exposure to subprime — if it wasn’t for the TAF auctions and the largess of the Fed Reserve to accept fictional assets as collateral, I think several US banks would have preceded Northern Rock.