Northern Rock this week faces a mass sell-off by shareholders if as expected the stricken bank is ejected from the list of top 100 companies on Wednesday, The Guardian reports.
FTSE tracker funds, led by Legal & General, will sell their holdings in the Rock when it stops being a member of the FTSE 100. It is estimated almost 10% of the bank is owned by passive tracker funds that have remained invested in the bank despite its value falling from more than £5bn to about £430m this year.
The move is likely to push shares in the bank back on a downward path and spark further calls for the government to stabilise its finances through a full-scale nationalisation.
THE CHANCELLOR IS this week expected to infuriate business by standing firm on his decision to introduce a flat rate of capital gains tax (CGT), according to The Telegraph.
Rather than putting a knife to the new headline 18% CGT rate, Alistair Darling will instead unveil a series of reliefs for retiring businessmen and entrepreneurs in a statement to the House of Commons.
Although the concessions are expected to alleviate the new burden on those hit hardest by the increase in the investment levy, they will come as a disappointment for many businesses which had been hoping for more radical changes.
RAB CAPITAL, THE quoted hedge fund manager in the thick of the plans for a Northern Rock rescue, today gave warning that turbulent market conditions would wipe out its expected profits gain for the full year, The Times reports.
In a surprise trading update, RAB, which manages more than $7bn of assets, said trading conditions in November had been "difficult".
The hedge fund said: "Given the influence of performance fees on profitability at RAB, and the proximity to year-end, this is likely to have an impact on the overall profitability of the group for 2007." .
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