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Wednesday, September 26, 2007

Northern Rock Caves In

Northern Rock finally caved in to pressure from politicians and taxpayer groups, and cancelled it £59M interim dividend. The 14.2p-a-share dividend was due to be paid next month to shareholders on the register at the end of this week.

Thus hammering another nail firmly into the coffin of the shareprice.

Northern Rock is now trying to sell itself, potentially to investors who target distressed assets.

Selling Northern Rock, possibly in pieces rather than as a whole entity, will effectively wipe out the remaining share price. The shares have fallen 74% since the bank said it was having credit problems 12 days ago.

The bank, trying to shore up its share price, said after the close of trading yesterday that it had received several approaches. Talks are preliminary and no price has been mentioned, it said.

This situation is beginning to resemble the Marconi debacle, where stock that once traded at above £12 ended up being traded for 12p.

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