While it is especulating about possible bidders for buying the bank, stockbrokers are advising shareholders to sell their shares ahead of a bid, as the stock is too risky for any investor who is not prepared for large losses.
Although last week Northern Rock share's value was buoyed by speculation that a bidder would emerge, stockbrokers warn there could be further falls.
Furthermore, many financial experts agree that there could still be very negative news for shareholders, because the situation is changing on a daily basis and analysts are having some difficulties to value the company. The main problem is that there is no guarantee that the company will even be bought at market price and this would be terrible for shareholders.
The last new about Northern Rock's bid is that Citigroup is ready to provide more than £5 billion in financing to ease the way for a takeover of the bank. Citigroup is a mayor American financial services company based in New York City http://www.citigroup.com/. The final terms of the deal are still being negotiated. This fund would be very important for Northern Rock, as the Bank of England can not provide liquidity to it for ever.
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