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Northern Rock shares fall again Northern Rock shares fall again
(about 1 hour later)
Shares in Northern Rock have slumped again on speculation that the stricken lender will be sold off at a discount.Shares in Northern Rock have slumped again on speculation that the stricken lender will be sold off at a discount.
As criticism grows over the handling of Northern Rock's rescue, the lender's share price dropped as much as 16.67%.As criticism grows over the handling of Northern Rock's rescue, the lender's share price dropped as much as 16.67%.
This reversed earlier gains prompted by the government's promise on Monday to guarantee all the savings in Northern Rock accounts.This reversed earlier gains prompted by the government's promise on Monday to guarantee all the savings in Northern Rock accounts.
Its shares are now down more than 50% since last Friday, but other banks and finance firms continued to recover.Its shares are now down more than 50% since last Friday, but other banks and finance firms continued to recover.
Financial markets around the world have been boosted by a cut in interest rates by the US central bank, the Federal Reserve, on Tuesday.Financial markets around the world have been boosted by a cut in interest rates by the US central bank, the Federal Reserve, on Tuesday.
Takeover targetTakeover target
Shares in Northern Rock fluctuated in early trade, but were down 10% by 1140BST. Shares in Northern Rock fluctuated in London trade, but were down more than 4% by 1313BST.
Top British bankers are sickened that their industry should have been tarnished by those pictures of anxious depositors scrambling to withdraw funds BBC Business Editor Robert Peston See Peston's blogTop British bankers are sickened that their industry should have been tarnished by those pictures of anxious depositors scrambling to withdraw funds BBC Business Editor Robert Peston See Peston's blog
In February, Northern Rock's share price reached a year high of £12.51, reflecting the strength of its loan book and confidence in its future prospects.In February, Northern Rock's share price reached a year high of £12.51, reflecting the strength of its loan book and confidence in its future prospects.
Now Northern Rock's future as an independent company is considered untenable.Now Northern Rock's future as an independent company is considered untenable.
Names are being thrown around as to who would be most likely to buy the stricken mortgage lender, most likely at a lesser price than what its flagging shares are currently worth.Names are being thrown around as to who would be most likely to buy the stricken mortgage lender, most likely at a lesser price than what its flagging shares are currently worth.
Lloyds TSB and HSBC have been tipped to be interested to expand their mortgage business.Lloyds TSB and HSBC have been tipped to be interested to expand their mortgage business.
Meanwhile, Deutsche Bank has confirmed it has acquired 3.64% of Northern Rock shares but won't say how much they paid or whether they bought the stake all in one go.Meanwhile, Deutsche Bank has confirmed it has acquired 3.64% of Northern Rock shares but won't say how much they paid or whether they bought the stake all in one go.
But the German bank says the purchase is not a strategic investment but a short term trading position, which means it could change at short notice.But the German bank says the purchase is not a strategic investment but a short term trading position, which means it could change at short notice.
Fingers pointedFingers pointed
Meanwhile, the Bank of England and the Financial Services Authority were at loggerheads over the last-minute rescue of Northern Rock, according to newspaper reports.Meanwhile, the Bank of England and the Financial Services Authority were at loggerheads over the last-minute rescue of Northern Rock, according to newspaper reports.
According to the Financial Times, FSA officials had reportedly urged the Bank to offer an emergency loan to Northern Rock weeks before the crisis.According to the Financial Times, FSA officials had reportedly urged the Bank to offer an emergency loan to Northern Rock weeks before the crisis.
But the Bank refused, citing the "moral hazard" of a bail-out.But the Bank refused, citing the "moral hazard" of a bail-out.
On Wednesday, calm appeared to have returned to financial markets, as savers to Northern Rock returned and investors regained confidence in the banking sector.On Wednesday, calm appeared to have returned to financial markets, as savers to Northern Rock returned and investors regained confidence in the banking sector.
But sentiment in Northern Rock was again hit with increasing speculation that the Newcastle lender will be bought at a much lower price than its already severely dented share price.But sentiment in Northern Rock was again hit with increasing speculation that the Newcastle lender will be bought at a much lower price than its already severely dented share price.
Others have blamed the FSA's light regulation for fuelling a system under which banks like Northern Rock could grow rich using cheap debt.Others have blamed the FSA's light regulation for fuelling a system under which banks like Northern Rock could grow rich using cheap debt.
The Bank of England had initially refused to prop up Northern Rock's business after the Newcastle lender found it could no longer access affordable short-term loans in the money markets because of the global credit crisis.The Bank of England had initially refused to prop up Northern Rock's business after the Newcastle lender found it could no longer access affordable short-term loans in the money markets because of the global credit crisis.
History of Northern Rock How the government would help Northern Rock saversHistory of Northern Rock How the government would help Northern Rock savers
The Bank's view was that a bail out would send wrong signals to the banking sector, encouraging the continuation of risky practices.The Bank's view was that a bail out would send wrong signals to the banking sector, encouraging the continuation of risky practices.
But Northern Rock executives believe that earlier action could have averted the crisis over the past few days that saw thousands of savers queuing up at branches up and down the country to withdraw their money. The bank's share price slumped by more than half in two days.But Northern Rock executives believe that earlier action could have averted the crisis over the past few days that saw thousands of savers queuing up at branches up and down the country to withdraw their money. The bank's share price slumped by more than half in two days.
Quick saleQuick sale
Recriminations have also been levelled at the Bank of England for not doing enough to help engineer a swift sale of Northern Rock when it was clear it was headed for troubled times.Recriminations have also been levelled at the Bank of England for not doing enough to help engineer a swift sale of Northern Rock when it was clear it was headed for troubled times.
Initially, the Bank refused to extend its emergency credit facility to a potential Northern Rock suitor.Initially, the Bank refused to extend its emergency credit facility to a potential Northern Rock suitor.
But even after relaxing this stance, many believe the rate of interest at which this facility is being offered - some say about 7% - is too punitive to be attractive to a buyer.But even after relaxing this stance, many believe the rate of interest at which this facility is being offered - some say about 7% - is too punitive to be attractive to a buyer.
BBC Business Editor Robert Peston said: "Top British bankers - who met the FSA again yesterday - are sickened that their industry, the very heart of the economy, should have been tarnished by those pictures of anxious depositors scrambling to withdraw funds."BBC Business Editor Robert Peston said: "Top British bankers - who met the FSA again yesterday - are sickened that their industry, the very heart of the economy, should have been tarnished by those pictures of anxious depositors scrambling to withdraw funds."