Advisers to look at Rock options


Northern Rock was nationalised in February 2008

The Government took its first formal step in returning nationalised bank Northern Rock to the private sector as it announced plans to hire advisers.

UK Financial Investments (UKFI) – the body charged with overseeing the Government’s banking assets – launched a tender for corporate finance advisers to look at the strategic options for Northern Rock, including a sale, but stressed no decisions had yet been made.

“There is no presumption at this stage that any particular option will be pursued and no timeframe has yet been set for the return of the company to private ownership,” it added.

Northern Rock was nationalised in February 2008 after it collapsed amid the credit crisis, sparking the first run on a UK bank for 150 years.

The Government split the bank in two at the start of last year, forming a mortgage and savings bank called Northern Rock plc and Northern Rock Asset Management to house the more toxic loans.

Advisers are being sought for Northern Rock plc – the so-called “good” part of the bank – with a report yesterday suggesting that Goldman Sachs and Bank of America had been contacted to prepare for a possible sale.

Northern Rock was brought into public hands nearly three years ago after the Government shunned takeover bids at the time from suitors including Virgin Money.

Virgin Money, headed by chief executive Jayne-Anne Gadhia, is still widely seen as a front-runner to snap up the group.

However, ministers have been keen to stress that a sale is not a foregone conclusion and a stock market flotation is also another alternative.

Northern Rock, which reports annual results in March, said it made losses of £140 million in the first half of 2010.

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