Northern Rock open to Mideast financing

(EPA)   

“Northern Rock is focusing on proposals received from Virgin and Olivant but has always said that all options remain open,” John Watson, spokesperson for Northern Rock told Emirates Business in an e-mailed statement.

“This is a confidential process and we are not naming other interested parties.”

Goldman Sachs, the US investment bank brought in by the UK Government to find a financing solution for Northern Rock, was told this week by Alistair Darling, Chancellor of the Exchequer, that the British Government had no objections in principle to sovereign wealth funds being included in any solution. The main funds from the region believed to have been approached by Goldman are Abu Dhabi Investment Authority and the Qatar Investment Authority.

Goldman is keeping the chancellor informed on a daily basis about the progress in finding ways to raise up to £15 billion (Dh112.5bn) to pay off a £25bn loan from taxpayers and avoid nationalisation of the mortgage lender.

Goldman has a deadline of mid-January to provide its ideas for a private-sector sale to end the Northern Rock crisis. The investment bank is under pressure to offer its ideas before a meeting of Rock shareholders convened by rebel investors scheduled for Tuesday.

“Northern Rock’s intention is to conclude its strategic review by February,” Watson said. Both the players currently in the race – Sir Richard Branson’s Virgin and Olivant, the group led by former Abbey National chief executive Luqman Arnold – need the financing to be put in place to make any formal offer to the bank.

If the Gulf sovereign funds do agree to back Northern Rock, they could either join this syndicate or form a separate financing package of their own. A private sector sale is preferred by shareholders who could lose the value of their investment if the government resorts to nationalisation.