Northern Rock shares hit record low

Crisis-hit Northern Rock's shares hit a new record low today on the 10th anniversary of its stock market flotation.

The Newcastle-based business saw its shares touch 144.5p in early trading, valuing the company at around £609m (€873m) - a decade to the day from the former mutual's debut as a publicly-listed company.

The fresh low for Northern Rock - already stricken by rumours of a cut-price rescue bid - came as analysts predicted the mortgage lender would slump to losses of more than £100m (€143.34m) next year.

Northern Rock has reportedly borrowed nearly £8bn (€11.46bn) from the Bank of England, which stepped in as an emergency funder to the UK's fifth biggest mortgage lender more than two weeks ago, triggering a run on the bank.

Panmure Gordon banking analyst Sandy Chen has now cut expectations from a £298m (€427.2m) profit to a £120m (€172m) loss in 2008 following the bank's woes.

He said: "Cost-cutting options are minimal, given Northern Rock's already highly efficient operations."

Following reports that private equity firms, including JC Flowers and Cerberus, have been given permission to look at the lender's books, Mr Chen added: "We could expect a bid for the loan book alone, at a discount.

"We lower our price target from 300p to 100p, whilst pointing out that lower bids could be easily justified."

Northern Rock's shares were trading at record highs of more than £12 (€17.20) earlier this year, but soaring borrowing costs in the money markets which the firm depends on for mortgage lending have sparked its current woes.

CMC Markets chief market analyst David Jones said: "There's simply no confidence in the stock."

The previous record trading low for Northern Rock's shares was 159p, on September 25. The shares closed at a record low of 163.1p that day.

David Buik, of spread betting firm Cantor Index, said: "Inertia has set in and the longer it takes to agree a deal, the more the shareholders will be rubbished."

The company's stock market woes came as British Prime Minister Gordon Brown and Chancellor Alistair Darling unveiled reforms designed to protect savers in the event of a banking collapse.

Mr Darling announced a new regime guaranteeing an individual's bank and building society savings up to £35,000 (€50,164).

Previously only the first £2,000 (€2,867) of people's savings and 90% of the next £33,000 (€47,301) were guaranteed by the Financial Services Authority.