RAB Capital, London hedge fund managers, have bought just over six percent of Northern Rock. The investment was made by RAB Special Situations fund, which purchased 4.8 percent on 17 and 18 September, and another 1.4 percent on 20 September. The stake in Northern Rock now accounts for about 4.2 per cent of the $2.3 billion investment portfolio.
“If the Bank of England allows Northern Rock to go under or forces it into a fire sale at a derisory price, thats an encouragement to the shorts. The shorts will find another target and create an atmosphere of panic if they succeed with this one,” says Philip Richards, fund manager, in an interview with the Times.
However, many bankers are surprised by the unexpected investment and consider Northern Rock’s brand to be beyond repair. “I dont see why anyone would want it now. The logic of buying it before was there was some goodwill value, based on the brand. But thats all gone now. There is no brand,” says one.