Northern Rock share price slumps 20%

Northern Rock's share price fell by around 20% today as analysts said current shareholders could lose out if Virgin's plans to pump cash into the group and rebrand the business went ahead.

Panmure Gordon banking analyst Sandy Chen said: "We have made some rough valuation scenarios on the Virgin offer - with a £1bn (€1.43bn) injection, they point to a potential for 150% returns for Virgin investors, but 20% downside for current Northern Rock shareholders."

Collins Stewart analyst Alex Potter added: "We continue to believe Northern Rock has little future as an independent entity but feel that rational bidders will be unlikely to pay more than 200p."