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New suitors for N Rock

21/11/2007

Beleaguered bank Northern Rock today confirmed it has received "additional indicative expressions of interest" from potential suitors.

In a statement the company revealed that one interested party was contemplating an offer for the lender "materially below" the group's closing market price yesterday.

Shares in Northern Rock closed down seven per cent at 97p following Tuesday's trading, with the value of the company's stock having dropped to record lows earlier in the day.

The slump came after reports said US private equity firm Cerberus was no longer interested in Northern Rock, but it has since been claimed the group has put forward a bid for the lender.

An earlier report yesterday also claimed US buyout firm JC Flowers had submitted a bid for the Newcastle-based bank, which would include an offer to its shareholders at a "nominal value".

A consortium led by Sir Richard Branson's Virgin group and an investment group headed by the former boss of Abbey have also previously declared their interest in Northern Rock, but the lender has not named its individual suitors.

Northern Rock today revealed it had begun discussions with a number of selected parties in regard to its future, but stressed there could be no certainty the talks would lead to an offer being made for all or part of the business.

"The company is aware that all stakeholders in the company want clarity on the outcome of the strategic review as soon as possible and is therefore progressing the process as quickly as possible," the troubled bank added.

Northern Rock expects to complete the strategic review of its business by February 2008, but says the company expects to make an announcement regarding the "preferred outcome" for the lender and its shareholders earlier.

At the start of this week chancellor Alistair Darling defended his handling of the Northern Rock crisis, with the lender having been at the centre of the first run on a British bank in almost 150 years in September.

The government was forced to guarantee the savings of Northern Rock customers to restore confidence in the UK banking system in the wake of the damaging incident, prompted by liquidity problems faced by the lender as a result of the ongoing global credit crunch.