LONDON (AP) – Shares in Northern Rock PLC slumped more than 4 percent on Monday amid increasing speculation that the troubled mortgage lender will be nationalized, rather than sold off to a private investor.
Stepping up pressure on Northern Rock ahead of a key shareholder meeting on Tuesday, the government has lined up a former Lloyd's of London senior executive to run the bank in the event it is taken public.
Analysts said the naming of Ron Sandler as provisional chairman suggested the government's contingency plans were well advanced and warned that if shareholders at Tuesday's meeting vote in favor of resolutions by two private equity firms to remove power from the board, nationalization will almost certainly be the result.
If Britain's largest casualty of the global credit crisis is put under state control, shareholders will receive nothing or little for their shares.
Northern Rock shares were 4.3 percent at 83.5 pence (US$1.64;