More contenders in the running for Northern Rock

To date, there are 3 proposals on the table for Northern Rock who include a consortium led by Sir Richard Branson’s Virgin Group and Olivant, run by Luqman Arnold, former Abbey chief executive. In addition, a standalone plan is being developed by the board of Northern Rock.

However, according to Treasury advisors, Goldman Sachs, other suitors have come forward and expressed an interest in the beleaguered bank. The renewed interest is believed to be brought about by the financial funding being offered by the Government.

Bidders have until the deadline of 4 February to come forward with rescue proposals based on the Treasury’s plans.

Private equity groups Cerberus and JC Flowers are thought to be interested, both groups withdrew their offers before Christmas. In addition, Lloyds TSB, has also reportedly requested further information, prompting speculation of a fresh bid.

The Government has outlined plans to turn the £25 billion lent to Northern Rock by the Bank of England into bonds guaranteed by the government.

The bonds will be sold to private investors under the plans, drawn up by investment firm Goldman Sachs, potentially to speed up a private sale.

This would avoid nationalisation of the bank but it is not yet known if private buyers will have the funds required for the deal.

As investors and prospective suitors thrash out the finer details of their proposals, Prime Minister Gordon Brown has been forced to defend Labour’s plans for the bank, in what has been a series of heated debates in the House of Commons.

Earlier this week, Conservative leader, David Cameron accused Gordon Brown of being ‘a used car salesman who won’t tell you the price’ and said that the Northern Rock deal is ‘damaging and dodgy’.

The desire is that a deal can be attained which will avoid the risk of turning over Northern Rock to state ownership. However, should this occur, Ron Sandler, the ex-Lloyds of London head would take the reigns, together with his hand-picked deputy, Ann Godbehere.

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