Despite a new bid being made by Olivant which was reportedly higher than what Virgin had offered, it has been claimed that plans to sell it will not work. Current Liberal Democrat leader, Vince Cable, repeated his call for the government to take temporary control of the bank’s affairs.
However, he claimed that he was not arguing for nationalisation for ‘ideological reasons’ but said that ministers ‘have to stabilise the situation’. The Prime Minister said all options were still being considered but the government was seeking a private buyer.
Olivant has tabled a bid which was higher than Virgin’s and would repay up to £15bn of taxpayer loans if it was given the go-ahead to run the bank. It would inject £500 million less than Virgin but buy shares at the current market price rather than a lower price, and only take 15 per cent of the bank compared to Virgin’s proposal of 55 per cent.
It is unsure when a decision iwill be made. Some reports have claimed that it will be made before Christmas while others believe that nothing will be decided until the New Year.
Northern Rock has claimed that is “accelerating the process” of examining the bids, while the chancellor and treasury officials are on standby to take an active role in deciding who should take over the Newcastle-based bank.
Meanwhile, Northern Rock has dropped off the FTSE 100 as the index has its quarterly shuffle. Bernard Clarke, communications manager at the Council of Mortgage Lenders, said: “There are plans for it to continue operating and there is not an impact from it dropping of the FTSE, but I don’t think this will bear much considering what else has gone on.”
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