Northern Rock in talks over selling business
October 9, 2007
Troubled mortgage lender Northern Rock has announced that it is currently in talks with potential buyers with regards to the possible sale of the business.
The lender, which is the fifth largest mortgage lender in the UK, hit massive problems over the past couple of weeks, after it was revealed that it had approached the Bank of England to take out a loan. As a result of this many of its 1.5 million savers quickly withdrew their savings over worries that the bank might fold, despite assurances to the contrary from bank officials and the government.
The lender has now confirmed that it is in discussions with companies that are interested in buying some or all of the business. One spokesperson from the bank stated: “The company has received a number of approaches regarding a variety of potential transactions.” However, officials from the bank have also confirmed that there is nothing firm in the pipeline, and that the discussions will not necessarily lead to a sale.
Northern Rock has also confirmed that there will be no dividend payout to shareholders next month – the dividend payments were due to be made towards the end of October. However, following the recent turmoil to hit the bank coupled with pressure from the Financial Services Authority and the Treasury the payments, amounting to nearly £60 million, will not be made.
One official stated: “The Treasury was deeply unhappy about Northern Rock paying a dividend at a time when the government has been forced to underwrite all deposits and loans to Northern Rock.”
However, officials from the UK Shareholders Association are unhappy about the decision, stating that: “many shareholders were persuaded to invest in shares in the company in recent months based on the apparent strength of the business when in reality the company was in great financial difficulty”.
Alan Wright
9th Octiber 2007
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