Northern Rock to be kicked out of FTSE 100

Crisis-hit Northern Rock will be booted out of the FTSE 100 Index on Christmas Eve under the biggest overhaul of the index since the September 11 terrorist attacks, it was confirmed today.

Crisis-hit Northern Rock will be booted out of the FTSE 100 Index on Christmas Eve under the biggest overhaul of the index since the September 11 terrorist attacks, it was confirmed today.

The beleaguered lender will be relegated to the FTSE 250 on December 24 after the Footsie’s latest quarterly review.

Its recent woes saw it fall to 331st place – based on yesterday’s closing share prices – narrowly avoiding the humiliation of a fall straight into small cap territory.

Six others will accompany Northern Rock in being ejected from the elite index as the turmoil in financial markets takes its toll.

Stocks have endured heightened volatility since the summer’s credit crunch, which led to Northern Rock’s funding crisis and the subsequent run on the bank.

Also on the way out of the top flight is newspaper group Daily Mail & General Trust, now ranked 118th, and in 117th place, sugars and ingredients firm Tate & Lyle, which recently reported a 19% drop in profits, will all be relegated.

They will be joined by Currys owner DSG International, which recently unveiled a 25% fall in first-half profits, Punch Taverns and housebuilder Barratt Developments, which only joined the FTSE 100 in June after its £2.2 billion takeover of Wilson Bowden.

All Bar One and Harvester owner Mitchells & Butlers is also on the relegation list.

Shares in Mitchells & Butlers, which stands in 120th position, have been gradually drifting downwards since mid-May, when they touched the 900p mark, to close at 496.25p today.

The group recently reported slowing sales growth and said costs linked to a shelved property deal with entrepreneur Robert Tchenguiz had risen to £260 million.

Those taking their coveted place in the blue chip index are Cairn Energy, Kelda Group whose time in the index could be short-lived as it is in the process of being taken over by an infrastructure consortium, Thomson holiday operator TUI Travel and bus and rail firm First Group.

Admiral, the car insurance group that was only created in 1991, security firm G4S and Thomas Cook Group will also move up into the premier league.

Funeral director services firm Dignity is among seven to rise from the small cap index to the FTSE 250.

The reshuffle is the biggest shake-up since September 11, 2001, when eight companies dropped out of the top flight index.

Share prices on the day had dived, with the FTSE 100 dropping by 287.7 points to 4746, as the market responded to the shock terrorist attacks.

Northern Rock is by far the biggest casualty of the recent turbulence on financial markets, having seen its share price plunge by more than 85% to just 99.2p today following September’s revelation that it had agreed emergency funding with the Bank of England.

The bank is currently valued at around £430 million, a far cry from its peak of more than £5 billion in February this year, but enough for it to rank towards the bottom end of the FTSE 250 mid-cap index.

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