B&B coy on the Rock

Northern Rock shares actually climbed today, after reports that Bradford & Bingley was interested in taking a stake - even though the building society has been busy playing down its interest.

Last Updated: 31 Aug 2010

The BBC reported yesterday that B&B had approached Northern Rock a few weeks ago about taking a stake as part of a private sector rescue package, sending the Rock's share price up 5% - something that hasn't happened much lately.

However, B&B has been pouring cold water on investors' ardour this morning by apparently denying the reports. According to reports, its spokeswoman said: ‘We are not actively pursuing a bid for any part of Northern Rock at this time,' although she admitted that B&B had been ‘one of several parties' to get a copy of the Rock's sales memorandum when it went on the block.

Nobody seems quite sure how such a carve-up would work, either. If Virgin or Olivant do manage to get a Rock deal off the ground, it seems unlikely they'll want to sell a bit to B&B. And with the Treasury now guaranteeing most of the Rock's liabilities (to the tune of £56bn of taxpayers' money, apparently), it's not clear how they'd be able to chop out a slice to sell to a private bidder.

Yesterday the Guardian reported that the Government was working on a plan to split the Rock's assets between the other high street banks if the private bidders fail and nationalisation becomes necessary - so perhaps the B&B talks are part of this process. Clearly this sorry saga has a long way to limp yet...

B&B has also been feeling the effects of the credit crunch. Concerns about its loan book have wiped about a third off its share price since August, as investors worried that it was going the same way as the Rock - it took a £4.2bn loan sale (which increased its cash pile) to stop its decline.

But even if B&B appears to be coping better than most, that doesn't mean it's going to ride to the Rock's rescue. So sadly there's still no light at the end of the tunnel for the lender's long-suffering shareholders...

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