Virgin’s preferred Northern Rock bid meets opposition

by Gill Montia

Story link: Virgin’s preferred Northern Rock bid meets opposition

Virgin Group’s position as head of the consortium named today as preferred bidder for Northern Rock could already be in jeopardy.

Olivant, the investment group headed by Luqman Arnold, former chief executive of Abbey National, is reported to be holding formal talks with the bank later today.

The plan proposed by Mr Arnold and his team involves Olivant paying the market prices for a 15% share in Northern Rock and installing a management team capable of turning around the beleaguered mortgage lender.

It is understood that Royal Bank of Scotland and Citigroup have agreed to provide an £11 billion borrowing facility to Olivant, thus enabling Northern Rock to repay some of the £25 billion that it has borrowed from the Bank of England.

Mr Arnold’s credentials are impressive; he was instrumental in steering Abbey through a critical phase before it was sold to Banco Santander of Spain.

Commentators are pointing out that other bidders are still in the picture, most notably JC Flowers, the US investment group.

Shares in Northern Rock increased to over £1 today, on the news that Sir Richard Branson’s Virgin Group had been named preferred bidder.