Member Article

Two options on the Rock

Just two options remain for the Government over Northern Rock if it is to avoid nationalising the Newcastle-based lender. Richard Branson’s Virgin Group and the bank’s own board are now the only contenders after Olivant withdrew on Monday evening.

Olivant, headed by former Abbey CEO Luqman Arnold, said it had failed to come up with an offer that could satisfy its investment needs, the Government’s financing terms and the interests of Northern Rock shareholders.

Olivant’s decision to pull out came on deadline day for final bids and sent shares in Northern Rock down 8%. The group was one of the long-standing serious suitors in the race to secure Northern Rock.

Virgin confirmed it had lodged a formal proposal, as did the bank’s board. Virgin’s plans would see Northern Rock rebranded as Virgin Bank. While Virgin will inject more cash into the bank - £1.25bn compared with £500m from the Rock board - the in-house offer has gained shareholder backing. The bid put forward by the board would see the bank kept as a stand-alone entity, but in a restructured and slimmed-down form.

This was posted in Bdaily's Members' News section by Ruth Mitchell .