Treasury tells Rock suitors to improve offers

Policymakers say Northern Rock bidders must improve offers to benefit UK taxpayers or see the bank nationalised

Written by Rachael Singh

Accountancy Age, 13 Feb 2008

The Treasury has given Northern Rock bidders a no-holds barred ultimatum to better their offers or lose out.

The government last night told Virgin Group and the Rock's management team that the offers so far were unacceptable and nationalisation would be the only option if improved bids were not put on the table.

Although John Kingman, the lead Treasury official, has informed bidders that the Virgin Group's offer was superior, he added that it would need to raise the amount it paid the government to guarantee a bond issue of £30bn.

Alistair Darling is calling on bidders to increase their equity stake to ensure taxpayers benefit from any recovery by the bank.

Vince Cable, the Liberal Democrats deputy leader said the government 'may just be talking tough in order to extract some last-minute concessions'.

Since Olivant withdrew from the bidding war, only the Virgin consortium and the management bid led by Paul Thompson remain.