any comments, thoughts, on this stock.

I would assume these guys flogged the debt into the market anyway as CDO's or whatever. They don't hold the lot, do they?

No they will have sold most of it periodically.
Thats the problem they have. They cannot sell more, because no-one wants to buy it at a price that keeps them solvent and they cannot use it to securitise more lending because it has little or no real value. Basically, due to lending very high loan to values, there is insufficient margin of value against security.
They have reached the point many householders reach of having borrowed against every bit of security they have.
Normally a private individual would then lend on a personal basis, but NRK cannot do that, because their business model is too precarious, based as it is on borrowing to lend out and living off the charges for doing so.
Would you lend money to an individual who has no security to offer and whose sole income was precarious?
(its all a bit more complicated, but that is close enough)
Alan

a pertinent excerpt ......

The UK lender now faces the prospect of being taken over by a competitor or by a private equity investor, or undergoing a break-up involving the sale of its mortgage book, its main asset.
However, some analysts were sceptical that a bid from a UK bank will materialise, arguing that rival lenders risk undermining their credit rating by taking on Northern Rock, and have little strategic incentive to mount a takeover bid.
'Theres almost a motivation for the UK banks to let this one wither on the vine. Its going to mean mortgage pricing improves because it takes out one of the most aggressive competitors in that market,' said Collins Stewart analyst Alex Potter.
'Northern Rock is going to be worth less and less the longer this situation is allowed to persist. The big banks appear to know this and for the moment are happy to sit on the sidelines,' Hichens, Harrison analyst Magnus Mathewson wrote in a research note.

ROUNDUP Northern Rock rallies following bid approaches


LONDON (Thomson Financial) - Shares in stricken UK mortgage lender Northern
Rock PLC jumped more than 12 pct today after it said late on Thursday that it
had received approaches from "a number" of potential buyers or investors.
Shares in Northern Rock closed 11.6 pct higher at 182 pence, while the FTSE
100 index settled 0.56 pct higher at 6,433 points.
The rally reflected hopes of an imminent takeover bid for the bank after it
revealed last night that it had received an unspecified number of approaches
from unnamed parties regarding "a variety of potential transactions."
Northern Rock said one of the approaches involved a potential takeover
offer, although it stressed that there had been no discussions about price.
"The fact that interested parties are emerging will be undoubtedly be taken
positively by the market this morning," Bear Stearns analyst Robert Sage wrote
in a note.
Northern Rock has lost three quarters of its market value since it revealed
on Sept 14 that this summer's global credit crunch had forced it to seek
emergency funding from the Bank of England.
The group, which relied on wholesale markets for 75 pct of its lending, was
more vulnerable than any other to an abrupt withdrawal of liquidity in early
August as banks stopped lending to each other amid worries over a surge in
defaults against sub-prime mortgages in the US.
The UK lender now faces the prospect of being taken over by a competitor or
by a private equity investor, or undergoing a break-up involving the sale of its
mortgage book, its main asset.
However, some analysts were sceptical that a bid from a UK bank will
materialise, arguing that rival lenders risk undermining their credit rating by
taking on Northern Rock, and have little strategic incentive to mount a takeover
bid.
"Theres almost a motivation for the UK banks to let this one wither on the
vine. Its going to mean mortgage pricing improves because it takes out one of
the most aggressive competitors in that market," said Collins Stewart analyst
Alex Potter.
"Northern Rock is going to be worth less and less the longer this situation
is allowed to persist. The big banks appear to know this and for the moment are
happy to sit on the sidelines," Hichens, Harrison analyst Magnus Mathewson wrote
in a research note.
Lloyds TSB considered making a bid for Northern Rock before its funding
crisis became public, but decided not to proceed, sources told Thomson Financial
News last week.
According to today's Times newspaper, one of the approaches to Northern Rock
came from Spanish businessman Jose Maria Ruiz Mateos, whose company Nuevo Rumasa
earlier this year bought the Spanish operations of Parmalat, the Italian food
company that came close to collapse in 2003.

UK's tripartite system of banking regulation 'found wanting under fire' - CBI
AFX


LONDON (Thomson Financial) - The UK's three institutions in charge of banking regulation and financial stability failed their first big test this month when credit concerns caused a run on a UK bank, a leading business lobby said today.

Richard Lambert, director-general of the Confederation of British Industry, said the so-called tripartite system -- comprising the Bank of England, the Financial Services Authority and the Treasury -- had 'been found wanting under fire.'

The run on lender Northern Rock Plc is something you would expect in a 'banana republic', Lambert said.

'That one should have happened in a mature and prosperous country like the UK is almost unimaginable,' he said at the CBI North East Annual Dinner in Northern Rock's home city of Newcastle-upon-Tyne.

He noted that the tripartite system was devised so that the FSA would monitor individual banks, the BoE would deal with systemic crises and sign the cheques, while the Treasury would provide public funds to keep sound institutions in business when necessary.

'For whatever reason, this tripartite system has failed to deliver the goods. Perhaps there are just too many conflicts inherent in a system where three different institutions, with three different policy priorities, have to come together to tackle a fast-moving crisis,' Lambert said.

He said it was not enough to blame current legislation, as BoE Governor Mervyn King did last week in his testimony before MPs.

'You don't wait for the cinema to catch fire before you check out whether the fire precautions are going to work,' Lambert said.

He suggested the relationship between the three supervisory authorities be re-examined to identify who should have the overriding authority in the event of a crisis.

Lambert said the process whereby the BoE acts as lender of last resort would have to be re-assessed, as the impact such a policy had on Northern Rock illustrated.

Furthermore, the deposit protection scheme -- where deposits above 35,000 are not guaranteed -- would need to be reviewed and changed, he said.

'The goal must be to strike the right balance between reassurance for the few, and costs for the many,' Lambert said.

"In view of the range of what we consider to be possible values for the shares, from zero to 357 pence, the final outcome for equity shareholders remains opaque," Robert Sage at Bear Stearns said in a note.

Does this sound like a white knight for the shareholders?


LONDON (Thomson Financial) - Beleaguered UK mortgage lender Northern Rock PLC has opened its books to US hedge funds, the Daily Telegraph reported, citing no sources.

Chris Flowers, a veteran Wall Street dealmaker who has experience of taking over troubled banks, has been given access after making a takeover proposal.

His offer, via private equity firm JC Flowers, is believed to be the sole approach that would keep the bank together. Other potential bidders, which include a private equity group led by US firm Cerberus, plan to break the bank up and divide the assets between them.

Relevant to the valuation of the NRK book??

UK Sept house prices rise; effects of credit crunch yet to be felt - Nationwide
AFX


LONDON (Thomson Financial) - UK house prices registered a decent gain in September, indicating that the turmoil in the credit market has yet to dent confidence significantly.

In its monthly survey of the housing market, the Nationwide said house prices rose by a monthly 0.7 pct in September, well up on the 0.3 pct increase predicted and the 0.6 pct gain in August. The annual rate came in at 9.0 pct, higher than the 8.6 pct gain expected but down on the 9.6 pct reading the previous month.

The average UK house now costs 184,723 stg.

Despite the relatively strong results for September, Nationwide pointed out that 'the trend growth of house prices is now the lowest since July 2006' and that credit conditions are definitely tightening for leveraged borrowers.

'Overall, house prices defied the gloomy predictions of some recent headlines, but their underlying growth is still on a decelerating trend,' said Fionnuala Earley, the building society's chief economist.

In the longer term the effects of the credit crunch will undoubtedly be to take some of the froth out of the market, she added.

Still, as the UK slowly moves towards lower interest rates, there may be life yet in the housing market, she argued.

'The likelihood is now that we will see a cut in base rates early in 2008, which is good news for mainstream borrowers and those coming off fixed rate deals,' Early added.

Cynic - Chris Flowers is a white knight for his own investors - buys heavily discounted .....

Telegraph.co.uk
Last Updated: 3:02am BST 27/09/2007By Katherine Griffiths, Philip Aldrick and Ben Harrington

.......... Alex Potter, an analyst at Collins Stewart, said: "They have confirmed they are in talks but it's very tentative. If you haven't even come to discussions on price, you are a long way from completion."

Discussions are likely to hinge on what funding guarantees the Government is willing to offer Mr Flowers and what discount Northern Rock will accept on its mortgage assets to make a deal worthwhile for private equity.

Analysts said Northern Rock cannot afford a discount of more than 2pc. Anything more would leave it insolvent. However, bankers insist the going discount rate for mortgage assets in the current market is closer to 5pc.

However, Bear Stearns analyst Robert Sage said: "We believe that the motives of other parties involved in Northern Rock are focused more on avoiding costs to taxpayers and protecting system stability.

"It may be that the desire to bring the debacle to an end could be at the expense of the ultimate risk-takers the equity holders."

Mr Flowers has experience of taking over troubled banks and returning them to profit. In 2000, with former Lazard banker Tim Collins, he bought the bankrupt Long Term Credit Bank now Shinsei Bank from the Japanese government for $1.2bn (600m).

In the space of little more than five years, investors made 12 times their original investment.

Mr Flowers is said to have been busy securing funds in recent weeks and one source said it was unlikely Lord Rothschild would be able to resist getting involved.

However, Mr Flowers is currently struggling with an ambitious $26bn offer for SLM, the parent of Sallie Mae, the large US student lender.

I've closed my short position because I'm going overseas for the weekend - so will probably drop now! Was a great trade over the last week ... Good luck both long and shorters.

yes me the same its sad making money out of other peoples misfortune but life a bitch

Sector in general is well on the up today. Even LLOY getting above 550p.

Shhh , otherwise they'll all want some.

Me and my big mouth, eh? ;-))

Looks rather strong past couple of days...is it a buy yet?

I think you will have to wait for a bit of new new's,

buy?..... no ..... sell? ..... dangerous but likely to be the right call

So it's a sell, cynic

imo, yes, but it's still quite brave and could go wrong

Time to buy was probably earlier in the week.

What is it now? Not a sell IMO with predators gathering. If a bid comes you're screwed. The time to short was 10 days ago!!