Reaction to Northern Rock nationalisation

(Adds analysts, more media)

LONDON, Feb 18 (Reuters) - Britain's government has said it
will bring mortgage bank Northern Rock Plc NRK.L into public
ownership -- the first major nationalisation in decades.

Following are comments on the move:

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ANALYSTS' REACTION

BEAR STEARNS ANALYSTS

"The valuation will be calculated assuming that the bank has
not been supported by government loans, and on this basis the
shares could have no value."

"This is slightly positive for the sector as the expected
managed decline in the Northern Rock balance sheet (and State
Aid rules which prohibit organisations from using government
assistance to compete) should create less competitive mortgage
market conditions."

ALEX POTTER, COLLINS STEWART

"You could have reasonably expected this. The dithering at
the start brought this into the range of possibilities and the
fact the government spent so long with Northern Rock in a limbo
state made it more and more difficult to reach a private sector
solution as every day went by."

KEEFE, BRUYETTE & WOODS ANALYSTS

"This has been a specialist situation for some time.
However, the fact that the government saw little private
solution, at this time, will at the very least create further
negative sentiment for the remaining UK monoline mortgage
players."

CREDIT SIGHTS

"Public ownership ... is not necessarily bad news for
bondholders. In fact, in current circumstances it could well be
the most favourable outcome in the short term, except for
holders of some Tier 1 securities."

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POLITICAL REACTION

GEORGE OSBORNE, CONSERVATIVE SHADOW CHANCELLOR:

"This is the day when Labour's reputation for economic
competence died. Gordon Brown has dithered his way to the
disaster of nationalisation.

"Now the taxpayer will bear the full risk of lending 100
billion pounds of mortgages in an uncertain housing market. We
will not back nationalisation."

VINCE CABLE, LIBERAL DEMOCRAT SHADOW CHANCELLOR:

"Belatedly the government has made the right decision.

"The first priority must be to work out the seriousness of
the problems at the bank with an independent audit of its loan
book.

"There will be difficult times ahead, especially for the
employees, as the bank is downsized. However, there is now hope
for the long-term future of the bank when it is eventually sold
in more satisfactory conditions."

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BUSINESS REACTION

MERVYN DAVIES, CHAIRMAN OF UK-LISTED BANK STANDARD CHARTERED
(STAN.L):

"It's been a well publicised problem but I think in the end
it's the right solution.

"I think the government had choices here and at the end of
the day it is trying to safeguard taxpayers' money."

On Ron Sandler: "He's a very accomplished individual and
will go through the portfolio and tackle it in the professional
way he has done in the past."

ANGELA KNIGHT, CHIEF EXECUTIVE OF BRITISH BANKERS'
ASSOCIATION:
"I hope it's nationalisation with a purpose and what we will
need to see over a fairly short period of time is a plan of how
to run the bank for the time being and also a plan for its
future."

RICHARD BRANSON, HEAD OF VIRGIN CONSORTIUM'S PROPOSAL:

"All of us in the Virgin consortium are very disappointed
that the government has chosen to opt for nationalisation.

"We were very clear the business plan we put forward was
robust, conservative but ultimately capable of rescuing the
interests of all stakeholders. However, we must accept the
decision with good grace and hope that the Rock will somehow
find better fortune in the future."

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SHAREHOLDERS' REACTION

SRM CAPITAL

"We will wait to see the details of the nationalisation bill
and after that we will pursue all legal and non-legal actions
available to us to secure value for shareholders," The Daily
Telegraph quoted SRM Capital founder Jon Wood as saying.

UK SHAREHOLDERS ASSOCIATION (UKSA):

"UKSA intends to pursue any legal options available to it to
thwart the nationalisation process and to ensure that fair and
reasonable compensation is paid.

"We will not accept the transfer of this company to a third
party after some temporary nationalisation from which that third
party will subsequently make substantial profits.

"How can (nationalisation) be justified where there were two
alternatives on the table to ensure the recovery of Northern
Rock and to protect the interest of other stakeholders?"