Northen Rock has vowed to find a private sector white-knight after the Treasury, FSA and the Bank of England floated a financing framework for the bank.
The Tripartite Authority's proposal would see Northern Rock raising funds from investors in the financial markets backed by 'a mixed pool of assets. This structure would ensure all Bank of England loan facilities to the company are repaid in full, with interest, upfront, as soon as the funds are raised.'
Northern Rock said: 'The board welcomes the Tripartite Authorities' confirmation of their preference to reach agreement on a private sector solution for the company which meets the Tripartite's previously stated objectives to protect taxpayers, consumers and to promote financial stability.'
In the last few weeks speculation has mounted that the embattled bank would have to be completely bailed out by the government by going down the route of nationalisation.
But today the company reiterated its aim to find a private sector buyer.
Northern Rock said it would now be working closely with the Tripartite Authorities to allow suitors to develop their proposals in line with the framework outlined in today's announcement.
Potential buyers have until 4 February to tender offers to the three members of the Authority.
The Authorities added: [We] recognise that any proposal relying on this financing structure is likely to involve state aid, which would require approval by the European Commission, and will submit a restructuring plan to the commission by 17 March.
'HM Treasury and the Bank of England will make arrangements for the existing Bank of England loan facilities to be extended up to this date to allow time to explore the financing structure with Northern Rock and other interested parti es.'
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