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Northern Rock 'can't find buyer'

Date 25 Sep 2007
Author The Editor

Stricken lender Northern Rock is continuing to struggle to attract a buyer, a report has claimed. At least 12 of the UK and Europe's biggest banks have now decided not to buy the Newcastle-based lender, according to the Sunday Times. The paper says banks have estimated that it would require too much capital - as much as £20bn - to successfully refinance Northern Rock.

Shares in the bank have lost nearly 75% of their value since it was forced to seek emergency funding from the Bank of England two weeks ago. Last week the government said it would guarantee all deposits held by Northern Rock, in an attempt to reinforce confidence in the firm.

Despite the government's pledge to guarantee all Northern Rock deposits held in accounts as of midnight, 19 September, its share price continued to fall at the end of last week. Northern Rock savers continued to queue outside some of the bank's branches to remove their funds. Branches in the North East were mostly free of this, however, with regional confidence in the bank running high.

A majority of analysts say the bank's future as an independent company is untenable, but a buyer has yet to come forward. Banks said to have turned their backs on a potential bid for Northern Rock are HSBC, Royal Bank of Scotland, Barclays and Lloyds TSB.

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