The three banks being lined up to provide £15bn to bidders for Northern Rock are refusing to sign off on any bail-out deal until the New Year at the earliest, according to senior banking sources. Sunday Telegraph, The Times
Citigroup, Royal Bank of Scotland and Deutsche Bank are all reluctant to give copper-bottomed commitments to a deal until the turbulence in the interbank lending markets has subsided.
Although sources close to Northern Rock are still confident that a deal can be agreed with either Sir Richard Branson’s Virgin Group or former Abbey National boss Luqman Arnold, the bank is believed to be dusting off alternative rescue proposals.
Representatives of Olivant, one of the consortiums bidding for Northern Rock, will meet executives of the Newcastle-based bank this week as the Rock continues to weigh up competing bids for the troubled company.
The bank’s board and its advisers held a telephone conference yesterday to discuss Olivant’s proposal, after the consortium led by Luqman Arnold, the former Abbey National chief executive, revealed further details of its bid last Friday. Sources said that a decision on the offer had not been made. Virgin Group is the Rock board’s preferred bidder, but Arnold’s proposal is favoured by shareholders because it attributes a higher value to their holdings.