Treasury prepares to consider rival bids for Rock

The Northern Rock crisis will inch a little further towards resolution today, as three bidders for the stricken mortgage bank submit their rescue proposals to the Government.

The Treasury, in consultation with the Bank of England and the Financial Services Authority, is expected to spend a week to 10 days considering the proposals, before ruling on which bidder will take over the bank, whose debt to the taxpayer is to be repaid through the issue of Government-backed bonds. Of the three players left, Olivant, the investment fund run by Luqman Arn-old, is the clear favourite among shareholders, particularly RAB Capital and SRM Global, the two hedge funds that have bought large stakes in the bank.

However, an in-house team led by Paul Thompson, appointed as a Northern Rock non-executive director, has also impressed investors in recent days, and is understood to be submitting proposals on similar terms to Olivant.

Virgin Money, the retail finance arm of Sir Richard Branson's Virgin Group, has struggled to win support from shareholders, chiefly because it proposes taking a much larger stake in Northern Rock than the other bidders, leaving less for existing investors. But Virgin insiders say that shareholders' views are of secondary importance in the bidding process, because the Treasury has said it will make its decision based on the interests of the taxpayer, rather than shareholders.

All three bidders have been told that their proposals must include a mechanism through which the taxpayer can benefit from any recovery in the value of Northern Rock – almost certainly through warrants that the Treasury could cash in at some point in the future.

The Chancellor will also consider the capital the bidders intend to put into the business – a measure on which Virgin scores highly – and the merits of their res-pective business plans. Virgin is stressing its determination to dump the Northern Rock brand; its rivals would continue trading under this marque.

Once the Treasury has made its decision, it will submit its recommendation to the Rock board for ratification. While the board has clear responsibilities towards shareholders, ministers have made it clear they will not allow RAB or SRM to impose their favoured solution. But RAB and SRM are insistent that bids should reflect the bank's true value. Both shareholders held talks with the bank last week and emerged arguing that the underlying business had not deteriorated despite the Rock's continuing liquidity problems.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
tvThe C-Word, TV review
Arts and Entertainment
The Ridiculous Six has been produced by Adam Sandler, who also stars in it
filmNew controversy after nine Native American actors walked off set
Danny Jones was in the Wales squad for the 2013 World Cup
rugby leagueKeighley Cougars half-back was taken off after just four minutes
Life and Style
The original ZX Spectrum was simple to plug into your TV and get playing on
techThirty years on, the ZX Spectrum is back, after a fashion
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

'Queer saint' who bankrolled artworld giants

British culture owes a huge debt to Peter Watson, says Michael Prodger
Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

Pushkin Prizes brings countries together

Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
14 best kids' hoodies

14 best kids' hoodies

Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk