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07 December 2023

Investor group backs N.Rock "in-house" rescue plan

By Agencies


A group of investors including US private equity firm Five Mile has indicated it will back an "in-house" rescue plan for stricken British bank Northern Rock, the Financial Times said on its website on Friday.

The newspaper, on its FT.com website, said the Tyne consortium had signalled it was willing to underwrite 200 million pounds ($390 million) of a rights issue being proposed by Northern Rock's new management team, led by Paul Thompson.

Northern Rock's second-biggest shareholder, RAB Capital, has also backed the in-house management team.

However, the newspaper also said that a rival rescue plan led by Richard Branson's Virgin Group was in pole position.

It quoted unidentified Treasury officials as saying Virgin's plan was "more advanced," and cited one person familiar with the situation as saying: "The management proposal is way behind in terms of capital and the people."

Virgin and the in-house management team submitted rescue plans for Northern Rock, Britain's biggest casualty of the global credit squeeze, on Monday. The government is expected to make a decision by the end of this month. (Reuters)