Northern Rock shares fall to record low

Shares in beleaguered Northern Rock fell to a new record low today amid looming prospects of nationalisation for the stricken lender.

The Newcastle-based company’s shares tumbled as low as 52.5p, giving the group a stock market value of just £221m.

The latest slump for the lender, which owes the Bank of England around £24bn, came amid bitter Commons exchanges over the handling of the crisis.

Britain's conservative leader David Cameron accused British Prime Minister Gordon Brown of “dither and delay” over Northern Rock, representing a “fresh chapter in the incompetence of this Government”.

Northern Rock’s value has now plummeted to just 4% of its £5.3bn peak less than a year ago, before a funding crisis triggered by last summer’s credit crunch forced it to turn to the Bank of England.

Fears over the possible levels of compensation that may be offered to investors if the company is nationalised sparked a fresh wave of selling, with shares trading below yesterday’s record low close of 63.25p.

Mr Brown defended the Government’s actions over Northern Rock, saying that the intervention was necessary to protect the wider economy.

He said: “The action we have taken was to ensure there is stability in the economy. And to ensure that stability we said we would secure the deposits of all depositors in Northern Rock and stand behind the company with support from the Bank of England.

“In the next few weeks we are looking at the situation of how we can find buyers for Northern Rock,” the Prime Minister added.

But Mr Cameron said each taxpayer was currently lending something like £1,800 to the bank and urged the Prime Minister to confirm the figures to the Commons.

“It is reported that the taxpayer is exposed to the tune of £55 billion,” he said.

Mr Brown refused to confirm the figures, but said it was his “intention” that all the money borrowed from the taxpayer by the lender should be paid back.

A consortium led by Richard Branson’s Virgin, and investment firm Olivant, is attempting to raise funding for a rescue – and an immediate repayment of part of the Bank of England borrowings – but nationalisation looms if a private sector solution cannot be found.

Yesterday Northern Rock’s shareholders were frustrated in their efforts to gain a bigger say in the future of the bank at an extraordinary meeting in Newcastle.