Global Economics

Northern Rock Hires Blackstone for Help


The private equity firm will advise the stricken British mortgage lender as it tries to find a way to survive post-bailout

Northern Rock signalled yesterday that it had additional options in resolving its fate as it confirmed that Blackstone, the private equity firm, had been hired as an adviser.

The stricken mortgage lender said Blackstone would be involved in all aspects of its strategic review, including securing future funding. Blackstone joins Merrill Lynch, Northern Rock's long-time broker, and Citigroup as an adviser.

The Government is underwriting Northern Rock's business and has given it until February to find a buyer or a way to survive alone. The bank is in early discussions with JC Flowers, a private investment firm, and Sir Richard Branson's Virgin Money but wants to attract as many potential saviours as possible. Blackstone has experience of complex restructurings and might help arrange a deal that sees the business sold to more than one acquirer.

Northern Rock said it had "developed further structures which allow it to seek additional expressions of interest from other parties, as part of its review of all strategic options".

Bryan Sanderson was appointed chairman of the Newcastle-based bank two weeks ago to bring disinterested thinking to the review. He replaced the previous chairman, Matt Ridley, whose family had been linked with the bank for many decades.

Mr Sanderson is said to have hired Blackstone because of his links with John Studzinski, the former Morgan Stanley and HSBC investment banker who heads Blackstone's corporate advisory business.

The Government wants North-ern Rock to speed up its review but the bank warned yesterday that the process was complex and at an early stage. It added: "All proposals the company has received so far are preliminary in nature. There remains no certainty that any third party discussions will lead to a transaction."

The bank said Blackstone, which had been mooted as a potential buyer of Northern Rock, had ruled itself out of the bidding process.

Any deal would have to resolve the problem of how to fund Northern Rock's business. Rock is thought to have borrowed about £20bn from the Bank of England under the lender-of-last resort arrangement announced on 14 September.

The British Bankers' Association will host a meeting today between some of the UK's biggest banks and the Treasury, the Bank of England and the Financial Services Authority to discuss the Northern Rock crisis.

Provided by The Independent—from London, for Independent minds worldwide

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