N.Rock Sinks to Record Low on Nationalization Fears

Shares in Northern Rock crashed over 20 percent to a record low on Wednesday as expectations mounted that the stricken British mortgage bank will be brought under state control.

Prime Minister Gordon Brown signaled the bank could be nationalized for a short period. In an interview late on Tuesday he said the government was still assessing all options "and that includes taking the company into public ownership and then moving it later back into the private sector."

The final decision on whether to nationalize the bank is expected to rest with Brown, as the bank has borrowed about 26 billion pounds ($50.9 billion) from the Bank of England.

Nationalization could leave shareholders with little or nothing.

Northern Rock shares were down 14.8 percent at 59 pence, after tumbling as low as 52.5 pence, down more than 95 percent from their peak last February and valuing the bank at just over 220 million pounds.

Shareholders in Britain's biggest casualty of the credit crunch backed proposals to curb some of the board's powers in a vote on Tuesday, but they stopped short of forcing it to ask for approval for any asset sales.

Bryan Sanderson, Northern Rock's chairman, said he was "reasonably confident" the bank could avoid nationalization and talks with two suitors continue and a standalone solution was still possible.

But he said financing a rescue package remains a challenge, and the decision on nationalization rests with the government and not the board.