The sale of Northern Rock was thrown into deeper uncertainty yesterday when one of the two remaining potential buyers threatened to walk away from a bid for the embattled bank. Financial Times, The Times, Daily Telegraph, Independent
Olivant, the private equity group headed by Luqman Arnold, former chief executive of Abbey National, had grown so frustrated with the process that it might not now make a bid, said people close to the situation.
Olivant has accused the mortgage lender of obstructing its attempt to raise funds from Citigroup and Deutsche Bank. Northern Rock is believed to have paid the two investment banks a £5m fee to provide financing to any bidder, but Olivant claims the lender’s board is not giving it access to them.
Olivant needs Citi and Deutsche to help provide a required £10bn-£15bn funding line – part of which will be offered by Royal Bank of Scotland, with whom Arnold is thought to have begun discussions.
Arnold is now demanding immediate access to the funding banks and for Northern Rock to choose before Christmas between his proposal and Sir Richard Branson’s Virgin, the current preferred bidder who is in talks with Citi, Deutsche and RBS. If no decision is made, Olivant will withdraw – leaving Northern Rock with no option but Virgin Money.