Arnold considers Northern Rock withdrawal

The sale of Northern Rock looks even more uncertain as Olivant, one of the two remaining bidders alongside Sir Richard Branson’s Virgin Group, threatened to walk away.

According to people close to the situation, the private equity group headed by Luqman Arnold, former chief executive of Abbey National, has grown so frustrated with the sale process that they are considering withdrawing altogether.

The move comes shortly after Cerberus, the US private equity group also abandoned its plans to bid for the beleaguered lender. Olivant is reportedly disappointed by the time the auction is taking and in a letter sent to Bryan Sanderson, Northern Rock’s chairman, the Olivant bidding consortium were said to have issued two demands: full access to the banks financing Virgin Group’s rival bid; and a decision on the winning bidder to be made by Christmas.

The ultimatum was issued after Mr Sanderson said on Monday that the outcome of the auction would not be finalised until the new year. A decision had been expected by Christmas.

Olivant, which wants to put in new management quickly, said last night it remained fully engaged in the process. But its withdrawal could come as early as tonight unless its complaints about the sale process are resolved, one person said.