Nationalization May Loom for Northern Rock

Branson's Virgin bid for troubled bank needs improvement, UK gov't says
By Jim O'Neill,  Newser User
Posted Feb 13, 2008 12:00 PM CST
Britain's Chancellor Alistair Darling makes a statement to the House of Commons, in London in this image taken from TV Monday Jan. 21, 2008. Treasury chief Alistair Darling outlined a plan Monday for...   (Associated Press)
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(Newser) – Troubled British mortgage lender Northern Rock’s share price plummeted 8% today as rumors of government nationalization grew after the Treasury panned rescue plans offered by Richard Branson's Virgin Group and a competing version from the bank’s management team, the BBC reports. Though shareholders reportedly prefer management's bid, the government favors Virgin’s plan—if it sweetens the deal.

Among the concessions sought is a bigger taxpayer stake in the Rock in return for guaranteeing funds. Shareholders would lose half their stake in the lender under Virgin’s plan, but could lose everything if the government nationalizes it, which Prime Minister Gordon Brown has said he’s willing to do. "Nationalization is looking much more likely," said one banker.