ClickAJob News

Troubled lender Northern Rock has confirmed that it is in "preliminary discussions with selected parties" over its future.

In a statement the bank said the talks covered various possibilities, including a potential sale of the business.

"The company has received a number of approaches regarding a variety of potential transactions, including the possibility of an offer being made for the company although no price has been referred to," Northern Rock revealed.

However bosses at the bank warned that there could be "no certainty" as to the outcome of the discussions.

Analysts have said that if Northern Rock is sold off it is likely to be at a discount, amid speculation that negative publicity surrounding the firm could put off prospective buyers.

It is also claimed that other banks and private equity firms could struggle to fund a takeover of the mortgage specialist in light of the ongoing global credit crunch that prompted the lender's recent difficulties.

Despite repeated assurances from Northern Rock chiefs that the business remains "profitable and sound", its future as an independent company is considered to be untenable after the damaging run on the bank earlier this month.

Thousands of savers withdrew their cash from the high street bank after it revealed on September 14th that it had asked the Bank of England to loan it emergency cash in the wake of the worldwide credit squeeze.

Northern Rock has not confirmed which parties it is in discussions with over its future.

However Spanish daily newspaper El Mundo has claimed that a group of Spanish investors, reportedly headed by Spanish entrepreneur Jose Maria Ruiz-Mateos, have written to Northern Rock's chief executive to declare their interest in the lender.

Meanwhile the bank has confirmed that it no longer plans to pay its shareholders a 14.2p a share dividend this year.

Analysts had warned that the planned £59 million payout to Northern Rock investors would have proved controversial in the wake of the government's pledge to guarantee all existing deposits held with the bank. Chancellor Alistair Darling announced the move in order to stop more savers withdrawing their cash from the company and sparking a wider crisis.

Confirming the decision to cancel the dividend payout, Northern Rock revealed that it was also looking at reforming its business model in light of current market conditions.

"The board believes that it would not be appropriate to make any interim dividend payment until it can make a full announcement regarding the outcome of discussions with other parties and the development of the business model," the company said.

But the news is not likely to be welcomed by Northern Rock investors, who have seen the value of the company's shares slide by 75 per cent since it was forced to seek emergency funding from the Bank of England.

Northern Rock is also facing accusations that it failed to inform its investors of its financial difficulties in the month before it turned to the central bank for assistance.

The UK Shareholders Association (UKSA), which represents the interests of private shareholders, claims that many Northern Rock investors "were persuaded to invest in shares in the company in recent months based on the apparent strength of the business, when in reality the company was in great financial difficulty".

According to reports the complaint could result in a class action legal suit against Northern Rock and its directors.