You are in > manchester.com  > News > FTSE drops Northern Rock

Finance

FTSE drops Northern Rock

12/12/2007

Beleaguered bank Northern Rock is one of seven blue chip firms to be dropped from London's FTSE 100 index of leading shares.

The results of the latest quarterly reshuffle of the FTSE 100, based on the market value of firms at the close of yesterday's trading, was announced after today's market closed.

In addition to Northern Rock, six other firms also left the FTSE 100 – with analysts suggesting their departures reflect the impact of the global credit squeeze on shares prices and expectations the economy will slow next year.

Newcastle-based Northern Rock has been the UK's most high-profile casualty of the credit crunch to date, with the lender having found itself at the centre of the first run on a British bank in almost 150 years in September.

Savers rushed to withdraw money held with the company after it was forced to accept an emergency loan from the Bank of England, having been unable to raise sufficient cash on the wholesale credit markets to operate its business.

In what is the biggest shake-up of the FTSE 100 since the September 11th terrorist attacks in 2001, housebuilder Barratt – which was only admitted to the index in June – has also been relegated to the FTSE 250 amid growing fears about the health of the property market.

Newspaper publishing group the Daily Mail & General Trust, sugar firm Tate & Lyle and owner of the Currys chain of electronic stores, DSG International, have also been dropped.

Pub operators Punch Taverns and Mitchells & Butlers – which runs the All Bar One and Harvester chains – complete the list of those thrown out of the top index.

Meanwhile car insurance firm Admiral and bus and rail firm First Group have joined the top 100, along with Cairn Energy, Kelda Group, TUI Travel, G4S and the Thomas Cook Group.

Commenting on the shake-up, David Buik, a spokesman for spread betting firm Cantor Index, told the Telegraph newspaper: "This is the largest number of exits and entries since September 2001.

"Progressive interest hikes and the toxic effects of the credit crisis have finally bitten."

The changes to the FTSE 100 will take effect later this month.