JC Flowers, the private equity group has walked away from the bid auction for Northern Rock, the stricken bank. Financial Times, The Times, The Independent
The US group, which submitted a revised proposal last week, is understood to have sent letters to Northern Rock and to the Treasury last night saying that it could not provide a revised offer that would both provide value to shareholders and satisfy government requirements on the sale of Northern Rock.
In letters sent to the stricken bank and to the Treasury yesterday afternoon, Flowers is understood to have told Northern Rock’s chairman, Bryan Sanderson, and John Kingman at the Treasury that it could not construct a deal meeting its own profitability criteria that would be acceptable to the Government.
Flowers had offered almost nothing to Northern Rock’s investors, on the basis that the bank is being propped up with government money, making its shares virtually worthless.
Northern Rock said yesterday that retail deposits had stabilised as it revealed for the first time the amount it had borrowed from the Bank of England.
The bank said that outflows of deposits had reduced sharply since Virgin Money was announced as preferred bidder nearly two weeks ago. The prospect of a one-off bonus for existing savers also helped to shore up the deposit base. The bank said it had borrowed less than £700m from the Bank of England in the past week, taking its total borrowing to about £25bn.