The Government’s approval of a £28bn gilt-edged refinancing plan for
Now the Government has said it would back the plans of its adviser
As part of this package, the Government said it wanted to select a bidder or approve a new ownership structure for the bank by next Monday, February 4. Previously Northern Rock’s board has said it wanted to complete its strategic review by February as well.
On November 26 the directors, led by new chairman Bryan Sanderson, said it would “take forward discussions on an accelerated basis with a consortium comprising
At the time Virgin said it would be able to raise only £11bn. This was insufficient for it to go ahead with a fully financed offer. This, combined with intransigence from Northern Rock shareholders at a specially convened meeting in January, suggested that temporary nationalisation would be the most likely outcome.
However, Government approval of the Goldman Sachs plan has sparked renewed interest in the Bank, with a refinancing of the existing business accompanied by a change of management viewed as highly likely. This was the original proposal of Olivant, backed by Luqman Arnold, former boss of Abbey National.
A source close to
Northern Rock director Paul Thompson, who was chief executive of Resolution Life, is also putting together a similar proposal combined with an equity issue of up to £1bn, possibly to US private equity firm Five Mile.
Flowers is also thought to be considering a fresh tilt at the bank. Fellow private equity firm Cerberus has not ruled out such an approach either. Other potential bidders for the bank, or some of its assets, might include Spanish banks La Caixa and Santander.
Catalan savings bank
Last month the ambitious lender was also in talks to buy another UK mortgage bank Alliance & Leicester for around £2.7bn. It declined to comment on suggestions it was interested in Northern Rock.
Before Northern Rock sought Government support, it had also been in talks with
Flowers’ interest may wane given the collapse of its US$4bn sale of NIBC to Icelandic bank Kaupthing. Flowers had originally hoped to float the Dutch bank before the deteriorating credit climate prompted a share sale to Kaupthing.