Coventry confirms intention not to bid for Northern Rock

COVENTRY Building Society has confirmed it will not be pursuing a bid for the assets of failed bank Northern Rock.

The society, which has announced record interim results, had hinted earlier this year it might be interested in taking on part of the bank if it saw value for its members.

However, in its results statement, the Coventry said it would not be taking the matter any further leading to fears the condition of Northern Rock may be worse than thought.

The statement said: “The board will continue to examine additional opportunities that may benefit members, and recently Coventry’s financial strength allowed us to consider if we should bid for Northern Rock.

“However, after careful consideration, the board concluded that to do so would not be in the interest of our members at this time.”

The uncertain economic climate is thought to have played a part in the decision but there is increasing concern that Northern Rock assets may now not be worth the £1.4bn bailout orchestrated by the previous Labour Government.

The bank has announced losses of £68.5m and it is thought the equity value has slumped to £1.1bn, leading to concerns taxpayers will never see a return on their investment.

The Coventry, still keen to realise additional value for its members, said it believed the economic uncertainty would continue to present opportunities and it would examine these when they became apparent.

In the meantime, it said: “It remains difficult to predict what will happen to the UK economy in the forthcoming months. Earlier this year interest rate rises were being confidently predicted by many with potentially more than one increase expected before the end of 2011.

“The sovereign debt crisis in Europe and an uncertain recovery from recession has altered these predictions considerably.

“We anticipate that interest rates will remain subdued by historical standards for some time despite continued inflationary pressure. The financial markets are likely to remain restricted and lending volumes will be constrained as a result. The housing market will continue to be depressed with volumes and prices kept low for the foreseeable future.”