The Guardian reported today that Northern Rock’s shares have dropped further overnight. The shares had started to gently rise to an reasonable figure but a fall of 21% has now left shares worth 216p.
Shares were on the rise when it was first announced that Team Branson were possibly jumping on the bandwagon. Northern Rock could be rebranded under the Virgin Money section of his empire.
The dip in worth may partly be contributed to the recent news that Sir Richard Branson’s package would act as a rescue for the bank and would only cover a fraction of the bank’s value. His priorities were to save jobs and continue the charitable donations that the Northern Rock Foundation provides.
Branson’s bid team is not yet complete but includes Virgin investors such as insurers AIG, Citigroup and Toscafund along with other major players from America and Asia. However it is likely the takeover won’t come quickly enough for Northern Rock, it is guessed that they may have to apply for more funding before a takeover is completed.
Even if the bank is rescued, existing shareholders are likely to be the ones to lose out. They may get as little as 130 - 190p per share, a drop of about 20%.
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