Northern Rock continues sales talks

Prior to the announcement, Northern Rock’s shares had plummeted to a record low of 121.50p and in a matter of weeks had seen its market value drop from £2.7 billion to £556 million – an 80 per cent fall – since it sought emergency funding from the Bank of England.

It is reported that JC Flowers founder, Chris Flowers, wished to retain Northern Rock as a whole brand rather than break it up for the businesses assets.

Previously, Lloyds TSB and Cerberus, another US private equity group, were also in the frame of bidders for the beleaguered bank, having met with Treasury officials about buying Northern Rock’s assets.

JC Flowers is reportedly being backed by Credit Suisse and JP Morgan.

Andy Frankish, managing director for Mortgage Talk, said: “The Northern Rock situation has shown the power of the media and the damage it can do to our industry. Northern Rock was a reputable brand, with good products. It shows how fragile a huge institution can be. I hope the brand remains as it’s a big employer in the North East.

“I don’t think what has happened to Northern Rock is irreversible and it might blow over with time, but time is not on its side. What’s ironic is that Northern Rock is a good investment. It’s still a profitable business with low bad debt, a good lending book and was envied by other lenders for its profits. Why wouldn’t anyone want to invest in a company like that?”

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