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Rock offers 'undervalue the bank' Rock offers 'undervalue the bank'
(30 minutes later)
Northern Rock has said the proposals it has received so far from potential investors are "materially below" the stricken bank's share price. Northern Rock has said the proposals it has received so far from potential investors are "materially below" the stricken bank's current share price.
Two suitors, Virgin Group and Olivant Advisers, have both submitted their proposals to rescue the bank.Two suitors, Virgin Group and Olivant Advisers, have both submitted their proposals to rescue the bank.
The bank said that it expected further expressions of interest to emerge.The bank said that it expected further expressions of interest to emerge.
Separately, the government has said there is no certainty that any bidder for the Rock will have access to £24bn of emergency loans after February.Separately, the government has said there is no certainty that any bidder for the Rock will have access to £24bn of emergency loans after February.
But it added that it was "willing to discuss" any proposals that envisaged a continuing role for the Bank of England, the Treasury and the Financial Services Authority.But it added that it was "willing to discuss" any proposals that envisaged a continuing role for the Bank of England, the Treasury and the Financial Services Authority.
Northern Rock's shareholders have had a huge dose of bad news Robert PestonBBC Business Editor Read Robert Peston's blog Northern Rock's shareholders have had a huge dose of bad news Robert PestonBBC Business Editor Read Robert Peston's blog class="" href="http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/shares/3/23193/default.stm">Northern Rock's share price
The Treasury has also warned that the support it has provided to the Rock represents state aid under EU rules and may therefore turn out to be illegal.The Treasury has also warned that the support it has provided to the Rock represents state aid under EU rules and may therefore turn out to be illegal.
Northern Rock had given bidders until Friday to come up with expressions of interest in buying the stricken bank.
'Value uncertain'
The comments came as Chancellor Alistair Darling outlined the government's stance on the possible sale of Northern Rock.The comments came as Chancellor Alistair Darling outlined the government's stance on the possible sale of Northern Rock.
Northern Rock, whose chief executive Adam Applegarth resigned on Friday, said that while it would still analyse and discuss proposals it had received, "the value to shareholders from any of the proposals remains highly uncertain". Costs and risks associated with Northern Rock should be "borne to the greatest extent possible" by the current and future providers of capital, the Treasury said, an indication that taxpayers could lose money as a result of the woes a the bank.
Northern Rock shares fell 9% in early trading to 120.5p. They had hit a high of £12.51 in February.
The bank, whose chief executive Adam Applegarth resigned on Friday, said that while it would still analyse and discuss proposals it had received, "the value to shareholders from any of the proposals remains highly uncertain".
They would depend on factors including an improvement in market conditions such as access to liquidity, it said.They would depend on factors including an improvement in market conditions such as access to liquidity, it said.
Northern Rock shares fell 2% in early trading to 129p. They had hit a high of £12.58 in February. Shareholder objection
The bank was forced to seek emergency funding from the Bank of England in September after the jamming up of world credit markets wrecked its business model.The bank was forced to seek emergency funding from the Bank of England in September after the jamming up of world credit markets wrecked its business model.
The government has a number of options when it comes to Northern Rock's future - it could let the bank go into receivership, seek a private buyer, or take it over itself.
The Treasury has dismissed the idea of the government taking control of the bank at this stage.
Meanwhile, Northern Rock's biggest shareholders are reported to have said the sale of the bank should be stopped.
RAB Capital and SRM Global, two hedge funds that own for 13% of the bank's shares, have reportedly argued that forcing a quick sale or break up of the bank would allow Northern Rock to be bought on the cheap.