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Last Updated: Wednesday, 14 November 2007, 10:06 GMT
Northern Rock tries to block leak
Northern Rock sign
Northern Rock shares have plunged in recent months
Northern Rock has won an injunction preventing the further publication of a sales document that was sent to potential bidders for the ailing bank.

The memo outlined sales options and showed Northern Rock could still owe 6bn to the Bank of England by 2010.

The document was posted on the Financial Times' Alphaville website and reported on by other newspapers.

Northern Rock had complained that the memo's publication could jeopardise complex talks to save the bank.

Rough outline

The High Court granted a limited injunction preventing further reporting of the memo, but rejected wider curbs.

"The company believes that further speculative reporting based on the illustrative information in the memorandum may jeopardise the complex discussions and negotiations taking place," Northern Rock said.

The bank set a deadline of Friday for all interested parties to submit their proposals for taking over Northern Rock.

BBC business editor Robert Peston said that there were three possible different destinations for the Rock:

  • the sale of the whole company
  • the sale of the basic physical infrastructure of the business, viz. the branches, information technology and call centre, which might or might not also include Northern Rock's 13.5bn of retail deposits and matching assets
  • the sale of the infrastructure plus all those securitised mortgages, leaving behind a rump of assets and liabilities for orderly run-off

In September, customers queued to withdraw their savings - in a modern-day run on the bank - as Northern Rock was caught up in the global credit crunch.

While a number of global banks have been affected, Northern Rock was particularly hard hit, because it borrowed large amounts of money from the financial markets that it then lent as mortgages.

Other banks raised a larger proportion of money from savers.

When the markets from which Northern Rock borrowed its money stopped lending, Northern Rock was forced to go to the Bank of England for emergency funding.

Northern Rock expects to have borrowed 24bn from the Bank of England by the end of the year.

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