Leaked memo 'could ruin Northern takeover'

Published on Wednesday 14 November 2007 11:56

NORTHERN Rock said today information in a confidential memo leaked to the press could jeopardise future takeover bids.

The crisis-hit Newcastle-based bank hit out after the contents of the internal memo to its advisers Blackstone, was leaked. The memo suggests the Government could be saddled with the company's crippling debts until the end of the decade.

One estimate contained in the leaked document said Northern Rock could still owe the Bank of England as much as 5.9 billion in 2010, contrary to Chancellor Alistair Darling's claims that public support for the beleaguered bank would only last months.

In a statement, Northern said: "The company believes further speculative reporting based on the illustrative information in the memorandum may jeopardise the complex discussions and negotiations taking place in connection with its strategic review."

The memo also says in a best-case scenario, the bank could be making annual profits of more than 500m within the next three years.

The leak came as the British Bankers Association said the government's systems of dealing with financial crises needed to be overhauled. In a statement to the Treasury Select Committee, the BBA warned fallout from the Northern Rock crisis risked "permanently damaging the UK's reputation as a leading financial centre".

And the London Stock Exchange has warned the frenzy of dealing in Northern shares has left many traders "hanging in mid-air" and urged all investors to settle transactions urgently.