It looks like Northern Rock is facing nationalisation!

It looks like Northern Rock, the failed British mortgage lender, is facing nationalisation and then a quick sale by the UK government. I have the gut feeling that Virgin Money and Olivant will not be able to borrow enough to finance the deal.
A deal has to be finalised by the middle of January.

Bank of England governor Mervyn King has made public his displeasure at the shareholders for making the rescue operation more difficult. Apparently, one
shareholder wants £4.10 a share for Northern Rock, if it goes for nationalisation.
This contrasts with the opposite view that the equity in Northern Rock has already been wiped out and so the realistic share price is zero.

If you have any CGT problems over your holding in Northern Rock, then you might need an accountant and a local one at that.

Northern Rock shares are trading under a pound.

It is amazing to think that quite recently shares in UK mortgage lender Northern Rock were trading at over £12. Today the price is just under a pound and with a further fall in view with the demotion of the bank stock from the FTSE-100
index.

The Tories are opposed to a nationalisation of Northern Rock. The Lib-Dems want a temporary nationalisation so that the institution can have time to sort out its problems. These involve being proped up by the Bank of England,which must be tearing its hair out, with a £25bn loan.

One factor is the number of Labour Members of Parliament in the North-East of England, who would be unhappy about any radical surgery to Northern Rock. However, the reality is that the bank is becoming increasingly frail with the loss of retail deposits despite the guarantee of full protection. This just leaves the £100bn mortgage loan book, which is unlikely to be rock solid, given the high loan values Northern Rock was giving to customers.

The preferred bidder is Virgin Money, which is benefitting from its brand name in proposals to turn Northern Rock around. Richard Branson is known as a tough negotiator but it might be better to finalise a deal with him than go for the option of nationalisation.

Virgin Money bid for Northern Rock!!

The Virgin Money bid for Northern Rock could see the former building society
pay the Richard Branson enterprise a percentage of annual revenues for the use
of the brand name. As part of a 20 year deal the figure could reach a total of
£200m. Virgin Money is the preferred bidder.
However, RAB Capital, which owns 7 pct of Northern Rock, does not think the
Virgin Money bid offers value and will reject it.
In today's Daily Telegraph Jeff Randall criticises the Richard Branson bid saying
Northern Rock shareholders will be funding their own rescue.