Northern Rock sent out a pros-pectus to potential buyers yesterday, inviting offers to break up the bank.
The information memorandum invites bids for the whole bank as well as offers for parts of the busines. As a break-up proposal, it suggests splitting Northern Rock's mortgage book from its operating platform but invites approaches on any other basis.
The document was agreed with the Treasury, the Bank of England and the Financial Services Authority, which have joint responsibility for overseeing Northern Rock.
Northern Rock has retained the option of continuing as a going concern with new funding, but people with knowledge of the bank say this is unlikely.
Sources see the options in the document as an attempt to impose order on the process and to attract additional bidders. The private investment firm JC Flowers, Sir Richard Branson's Virgin Money and the private equity house Cerberus have inspected Northern Rock's books but none has put forward a viable proposal.
With a new chairman in place and an expanded list of advisers, the prospectus marks the start of a long sale process. There will be no announcement before Christmas, an informed source said.
Bryan Sanderson, the former chairman of Standard Chartered, was appointed two weeks ago. He has the task of trying to find a deal that satisfies the Government and other stakeholders in the bank, though shareholders could end up with nothing.
Northern Rock employs about 6,500 people, with about 5,500 in the North-east, where it is one of the biggest employers and – through its independent foundation – the biggest contributor to local causes. Mr Sanderson said yesterday that compulsory job losses could not be ruled out.
"If the company is sold, does it necessarily have to involve job losses? Well, it's very hard to answer because we don't know what any potential buyer will do with the bank.
"It could be they run it as it is and there are minimal changes but on the other hand that is not the most likely outcome," he told the Newcastle Journal. The commitment was made by Adam Applegarth, the chief executive, on the day the emergency funding was announced, before the scale of the crisis was apparent.
Unite, the trade union, attacked Mr Sanderson's comments, saying the company had previously agreed there would be no forced redundancies.
Graham Goddard, Unite's deputy general secretary, said: "The new chairman has yet to meet any staff representatives of Northern Rock. We would urge him to think carefully before he makes further comments about the future of staff and to sit down and meet the union."
The BoE's balance sheet suggests that the Government and the central bank have lent Northern Rock about £23bn since mid-September when its emergency funding was put in place.Reuse content