Hedge funds to pounce on Northern Rock

Three hedge funds are set to pounce on Northern Rock, the British mortgage lender. Chris Flowers, a former Goldman Sachs banker, along with Cerberus Capital Management L.P. of New York and Citadel Investment Group LLC of Chicago, are reportedly plotting to split Newcastle-based Northern Rock’s $202.2 billion (100 billion pounds) mortgage book, the Sunday Telegraph reported. Now that the firm’s mortgages have plummeted below face value, the hedge fund suitors can cash in if they hold the mortgages until they mature, the Telegraph said. But the shareholders would have virtually nothing. The suitors haven’t approached Northern Rock’s board yet. Rumors of the bank’s takeover have swirled for the last week, with Lloyds TSB Group and Barclays of London; Edinburgh-based Royal Bank of Scotland, and National Australia Bank reportedly considering a purchase InvestmentNews, Sept. 19. The Bank of England also floated billions to Northern Rock, including $6.06 billion (3 billion pounds) from its emergency credit line last week, the Telegraph said.