Rock’s biggest shareholder heads for exit

Northern Rock’s largest shareholders have been selling shares fast in the past two days. Baillie Gifford, the Scottish fund management partnership, is understood to have sold most, if not all, of its 6 per cent holding in the bank, realising a loss of up to £200m.

Baillie Gifford, formerly Northern Rock’s largest shareholder, made the sale at some time in the past two days, according to people close to the group. The move took place during unusually high daily trading volumes in Northern Rock of more than 242m shares on Friday and 277m on Monday.

Northern Rock shares, which peaked at more than £12 in February, fell from £6.68 on Friday morning, the day after the Bank of England announced it had advanced emergency funding to the troubled bank, to £2.82 at Monday’s close. Monday’s guarantee from Alistair Darling, chancellor of the exchequer, helped send the bank’s shares up 8.2 per cent to £3.30 at Tuesday’s close.

Baillie Gifford, a long time shareholder, announced it held a 6.91 per cent stake in January when the shares stood at about £11.50. In June the group reduced its holding to 5.98 per cent.

Baillie Gifford’s move means Northern Rock’s largest shareholder is now Scottish Widows Investment Partnership, the investment arm of Lloyds TSB’s insurance subsidiary. Lloyds TSB had been in talks to buy Northern Rock.

Scottish Widows Investment Partnership had held a 4.7 per cent stake, or 19m shares, but it also appears to have been selling shares in the last two days. The latest figures from the London Stock Exchange show the group has sold down its stake to 3.9 per cent since the weekend.

Legal & General now ranks as the second largest holder with a 3.5 per cent stake in its passive index tracking funds, which are obliged to mirror stock market indices.

Private investors also hold a high proportion of shares, having bought them when Northern Rock demutualised and became a bank in 1997.

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