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. Last Updated: 07/27/2016

Funds Eye Northern Rock Deal

LONDON -- Three leading hedge funds are planning a breakup of beleaguered British bank Northern Rock, a newspaper report said Sunday.

The move could generate hundreds of millions of pounds in profits but would leave shareholders with virtually nothing, The Sunday Telegraph said.

The plan is to acquire the bank's mortgages at below face value and make a big profit by holding them until they mature. The deal would see the funds divide up the mortgage book, worth more than ?100 billion ($200 billion).

The paper said Chris Flowers, a former Goldman Sachs banker who made a fortune from the rescue of Japan's Long Term Credit Bank in 2000, was among the group, along with the funds Cerberus and Citadel.

The funds, however, have yet to approach the Northern Rock board. A Northern Rock spokesman declined to comment.

Britain's fifth-largest mortgage lender has been seen as a likely takeover target after undergoing a funding and customer confidence crisis, triggering the worst run on a British bank in living memory.

n The Bank of England has lent about ?3 billion ($6 billion) to Northen Rock, a newspaper reported Saturday.

Analysis of the Bank of England's weekly balance sheet showed that the bank had been forced to borrow the amount in publicly funded loans, the Financial Times said.

A Bank of England spokeswoman said the ?3 billion figure was speculative.