JC Flowers demands Northern Rock Treasury discussions
by Gill Montia
JC Flowers, the US private equity firm, is threatening to drop its bid for Northern Rock.
The buy-out group is reported to be asking for an immediate discussion with the Treasury and has suggested that it is being ignored by Treasury officials.
At the beginning of last week, Sir Richard Branson’s Virgin Group was named preferred bidder for Northern Rock, since when other bidders, including JC Flowers, have returned with new proposals.
There have been accusations that Virgin is receiving preferential treatment, however, it can be argued that Virgin has the ability to strengthen Northern Rock’s brand, and improve its retail deposit bank, in a way that other bidders can not.
However, JC Flowers appears to be determined to stay in the running, and is wooing shareholders with the news that it would retain Northern Rock’s stock market listing, so that shareholders can benefit from any recovery.
It had previously been understood that its plans involved bankruptcy, which would leave shareholders with nothing.
Last week Northern Rock withdrew Eskimo Loans, its unsecured lending business, and ceased offering its Visa credit card to new customers. The bank also increased interest rates on its branded loans, by 2%.
The mortgage lender now owes the Bank of England close to £30 billion.
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