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LONDON - Investment bank Goldman Sachs has been asked to use its global reach to help put together a financing package to rescue ailing bank Northern Rock, a UK Treasury spokesman confirmed yesterday.
The spokesman said the package would be available to any buyer and the two main bidders, Virgin Group and Olivant, would be treated equally. Fears that Olivant would withdraw, to leave just one interested suitor, and news of a £281 million ($739 million) hit to profits from its exposure to the credit crisis sent shares in Northern Rock tumbling 13 per cent on Friday.
Virgin has been in "accelerated" talks with Northern Rock advisers after being picked as preferred bidder.
Olivant will now be treated on an equal basis in all respects, including gaining access to banks providing financing for a deal. The Treasury spokesman said the US bank's fees would be paid by Northern Rock.
The Treasury spokesman was responding to a report in the Financial Times at the weekend which said the move was seen as a last-ditch attempt to find a private-sector solution to the bank's crisis. Both Virgin Group and Olivant are struggling to find the financing to take over the bank and repay £25 billion of taxpayer-backed loans, the FT said.
UK Chancellor of the Exchequer Alistair Darling approved the involvement of Goldman Sachs, in the hope it will help find backers for a private sale and speed up the process, the newspaper added. Northern Rock declined to comment.
- Reuters
