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Bradford & Bingley expresses interest in Northern Rock

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by Kay Mitchell
”Bradford

Bradford & Bingley (B&B), the buy-to-let specialist, is rumoured to be interested in buying assets from crisis-torn Northern Rock. B&B is interested in taking on some of Northern Rock’s mortgage assets and could possibly do a deal with either of the consortia seeking to rescue the firm.

Following the news, shares in Northern Rock rose 4.5% while shares in B&B rose by 2% as the company played down rumours that it is still considering buying assets from Northern Rock.

The Treasury has extended financial guarantees to Northern Rock at B&B’s request.

The government’s aid package for the bank now amounts to approximately £57 billion. The Treasury recently made sure that Northern Rock received enough funding from the money markets to survive into the New Year. However, this means each taxpayer has a £2,000 exposure to the bank.

Northern Rock had to seek emergency funding from the Bank of England after the global credit markets dried up. This sent customers of the bank into a panic and withdrew their savings.

A consortium led by Sir Richard Branson’s Virgin Group was announced to be the preferred bidder for the crisis-torn bank. However, investment group, Olivant, run by Luqman Arnold, former Abbey chief executive, is also in the running.

If a deal is not reached, the bank could be placed into administration or nationalised.

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News posted: December 19, 2007

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