Northern Rock back Treasury refinancing plan
Troubled bank vows to plough on with finding a private sector solution to its probelms after Treasury issues refinancing template on behalf of the Tripartite Authorities
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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