Led by former boss of the Abbey, Luqman Arnold, the group – named Olivert – proposed to buy a minority stake in Northern Rock and would then send a team of ‘experienced principals’, led by Arnold, to work with Rocks’ existing management regime.
However, Olivert confirmed it would not seek to buy a majority stake in Northern Rock.
The independent group would represent an alternative to the recent reported interest from Virgin Money and JC Flowers, with equity house Cerberus also rumoured to be interested in the bank.
Following news of Olivert’s interest in the bank, shares in Northern Rock rose by 8 per cent. However, suggestions from various industry commentators have indicated that the level of borrowing it has required from the Bank of England’s emergency fund had reached around £23 billion, with estimations that this would rise to around £30 billion by the end of the year.
Speaking to the BBC, Simon Ward, economist at New Star Asset Management, admitted his belief that the emergency funding from the Bank of England would have to continue until a suitable, sustainable model could be found to aid the troubled bank’s future and ensure its survival.
Ward explained: “I don’t think the Bank of England loans will stop growing until a decision has been made about Northern Rock’s future.”
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