UK's Northern Rock is heading for a takeover by Corina Ciubotaru

England's fifth biggest mortgage lender, Northern Rock, is in a bit of trouble. It appears it went to the Bank of England to ask for emergency funding and as soon as customers found out, they rushed to get their money back. They withdrew almost 2 billion pounds on Friday and Saturday, which amounts to 8 percent of the bank's deposits. Also on Friday, Northern Rock's share price dropped by 31 percent, adding to concerns that the bank might be up for sale soon; in total, the company's shares have dropped 60 percent this year. Offers for purchase are not few, as banks including Barclays and Lloyds TSB have shown interest, only to be discouraged by difficult credit markets. Still, nobody's saying Northern Rock is headed for a takeover, as there are three possibilities for it to continue existing: a takeover, nationalization or restructuring. Customers have been assured that all their money will be returned should they decide to reclaim them. The bank initially had a deposit base of 24 billion pounds and massive withdrawals from its client base would make the other banks feel insecure again about giving loans.The bank's problems are starting to affect the entire British economy; there could even be a mortgage slump and the pound is slowly starting to fall. Today it had a value below $2 for the first time in almost 3 weeks and things look even worse when comparing the pound with the euro: the sterling had the lowest level today since July 2006.

related story: http://uk.news.yahoo.com/rtrs/20070916/tts-uk-northernrock-sale-a8bf950_5.html

by Corina Ciubotaru for PocketNews (http://pocketnews.tv)

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