Olivant could jeopardise Virgin takeover of Northern Rock


The consortium led by Sir Richard Branson’s Virgin Group was yesterday confirmed as the preferred buyer for crisis-torn Northern Rock. Bryan Sanderson, Northern Rock’s chairman, described the proposed deal as ‘very good news’ for the bank.

However, the investment group, Olivant, run by Luqman Arnold, the City stalwart and former Abbey chief executive, is to enter formal talks in the next 24 hours to take over Northern Rock in a move that could threaten Virgin’s takeover.

Mr Arnold and his team propose to pay market prices for a 15% stake in Northern Rock and bring in a management team of experts to transform the bank and said that it is able to move immediately.

The board of Northern Rock has reviewed and rejected Olivant’s preliminary proposals, but Mr Arnold is eager to be seen as a serious buyer of the bank as an ongoing business. Several years ago, he turned around struggling mortgage bank Abbey National before selling to Spain’s Banco Santander.

It has also been announced that SRM Global, a hedge fund run by former UBS trader Jon Wood, increased its Northern Rock stake from 6.44% to 6.84% at the end of last week.

Bryan Sanderson, the chairman of Northern Rock, said in a statement, I am grateful for the support that we have had from customers and employees who have stayed loyal to us during these difficult times and pleased that a solution that firmly restores the company’s prospects has been identified.

Shares in Northern Rock soared back past the £1 barrier for the first time in almost a week when Sir Richard’s Virgin Group was named as the lender’s preferred buyer.

Others expressing an interest in Northern Rock include private-equity groups, JC Flowers, Cerberus, Blackstone and Apollo.

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