The share price of Northern Rock tumbled almost a quarter in value this morning after the beleaguered British bank said takeover proposals received undervalued the company. Northern Rock shares slumped 22% to 103 pence.
Northern Rock said today that approaches from potential suitors were 'materially below' its market value worth of £559m sterling at the end of last week.
The bank added that talks with the suitors were continuing, with approaches from other potential buyers expected 'in the next few days.'
Northern Rock, once Britain's eighth-biggest bank, revealed in September that the global credit crunch had forced it to seek emergency support from the Bank of England.
The group's borrowing from the central bank has reached an estimated £25.3 billion since then as it explores takeover proposals and rescue packages from at least four potential buyers.
Financial markets are nervous that more banks will report losses from the US sub-prime loan crisis caused by rising defaults by American homebuyers with patchy credit histories.
British bank Barclays last week became the latest high profile financial institution to announce hefty losses linked to the global credit crunch.
Separately, the British government's Treasury department said it was 'willing to discuss' proposals to take over Northern Rock which envisage extending the lender's emergency support from the Bank of England beyond its scheduled expiry in February 2008.
On Friday, Northern Rock's chief executive Adam Applegarth announced his resignation as an informal deadline for bids for the bank passed.
Among those parties looking to save Northern Rock is Virgin, the conglomerate owned by British tycoon Richard Branson. Another bid has been lodged by former Abbey National chief executive, Luqman Arnold.
