Is Northern Rock for sale?
Yesterday's profits from Northern Rock surprised many in the UK investment arena with the group rebounding from its worst years in living history to a profit of £200 million. The group has effectively been split into a "good bank" and a "bad bank" although the performance of the two separate operations could not be more different!
However, yesterday's assessment of the current situation has prompted a flurry of speculation regarding a potential sale of the "good bank" although this has been refuted by the company. A very vague suggestion that the government is "looking at various options" has prompted some to ask whether Northern Rock may actually be in the frame to acquire some of the Lloyds bank assets which the European Union is forcing the company to sell. Could Northern Rock expand in the short term before a potential privatisation or sale to a trade buyer?
While the UK government is playing its cards very close to its chest there is no doubt that if a "reasonable" offer was to materialise then the group would likely change hands. However, the government now has an obligation to hold out for the best price and as a consequence it could take some time before Northern Rock, either one or both entities, is removed from the ownership of UK taxpayers.
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