A growing feeling that nationalisation looms has hit shares in Northern Rock. The weekend appointment of ex-Lloyds of London executive Ron Sandler to run the bank if the government does take control seems to have concentrated minds.
Ahead of a vital shareholders meeting tomorrow, the bank's shares have dropped 3.75p to 83.5p. The meeting will vote on proposals by hedge funds RAB and SRM to put all sale proposals to shareholders, which will severely restrict the whole process.
In a sell note, analysts at Collins Stewart said: "If RAB and SRM win tomorrow, we believe a rescue deal will be much harder to achieve (and it's hardly been easy thus far) and the government will very likely nationalise the bank. We feel this will leave very little for equity shareholders. If the hedge funds lose, a rescue deal is still not guaranteed and unlikely to be materially above the current stock price in any case. In short, heads you lose and tails you don't win."
More on Tesco, now the biggest faller in the FTSE 100, down 11.25p to 414.75p. Nick Bubb at Pali International has joined the ranks of those worried about Tesco's numbers due tomorrow.
He says: " The market seems confident that Tesco will deliver around 4% like for like, excluding petrol, in the UK over the Xmas period, but we wouldn't be so sure of that, if the weak December TNS/Nielsen data for Tesco is to be believed (which implied that Tesco is actually becoming the big loser from Morrison's resurgence, with Sainsbury protected by its south-east base and by its big non-food growth). Unless the like-for-like outcome is boosted by the inclusion of the early January period or by the growth of Tesco Direct we wouldn't be surprised by an outcome of nearer 3%, which would be a big miss in food retailing terms. Notwithstanding Tesco's overseas strengths and freehold property base, the shares could weaken on any UK trading disappointment."
Seems the shares are already starting to take some of this into account.
