It seems that not a day goes by without a mention of Northern Rock, the beleaguered bank, and today is no exception. Shares in the company fell a huge 41% in early morning trading, down to an all-time low of 60p. But after being suspended five times in early morning trading, the stock has now bounced back a little, and stands at 81.1p. It is, predictably, the biggest loser on the FTSE 100.
Over on the FTSE 250, Paragon, the buy-to-let mortgage lender, has plunged 43.7% to 115p due to difficulties on the credit market. The company says it might need to raise up to £280m in a right issue if other funding does not become available by the end of February. UBS will underwrite the rights issue, which is conditional on several conditions.
More worrying is the group's statement: "Such conditionality gives rise to a material uncertainty related to events or conditions which may cast significant doubt on the group's ability to continue as a going concern, and therefore it may, if it is unable to satisfy these conditions and in the absence of other funding alternatives, be unable to realise its assets and discharge its liabilities in the normal course of business." The group - again, predictably - is the biggest loser on the FTSE 250.
But despite this, the FTSE 100 is actually looking in relative good shape this morning, up 33.4 points to 6154.2 after starting the day flat.
This, it seems, is due to the recovery of the banking sector. After opening down due to credit concerns, banks have bounced back. Alliance & Leicester, for example, is up 16.5p at 598p, and Bradford & Bingley, a FTSE-250 company, is up 17p at 274p after selling a portfolio of loans to various different parties.
ICAP, the inter-dealer broker, is also partly responsible for the cheerfulness of the FTSE 100, after posting record revenue and profit for the first half of the year.
And investors seem happy with the report on private equity, compiled by David Walker. This calls for a voluntary adherence to a private equity code of conduct, whereby private equity firms should disclose a similar business review to that disclosed by listed companies. Naturally, 3i, being the only private equity group listed on the FTSE 100, already has to disclose such information. Still, its shares were up 32p at £10.66.
