Olivant withdraws Northern Rock bid

Olivant pulled out of plans to rescue Northern Rock on Monday night in a move that confounded British ministers and left just two proposals to take control of the stricken bank. The private equity group pulled out an hour before the afternoon deadline for bids, blaming the inflexible terms set by the government in its financing package. On Monday night the Treasury was trying to persuade Olivant to re-enter the process and a person close to the firm said such a move had not been ruled out. Olivant’s withdrawal leaves one bid from a consortium headed by Virgin and another from Northern Rock’s management. Olivant’s proposal had attracted the support of Rock shareholders including SRM and RAB, the hedge funds that own 18%. Last night, RAB indicated willingness to put £50m-£100m in a rights issue if the proposal from Rock’s management was chosen. The sale process has already had its share of unexpected reversals, notes Lombard. “But if this really is the final line-up, then the choice facing the government is no easier than it was before Christmas: Sir Richard Branson, a zombie bank, or nationalisation. Hardly what one would call a beauty parade”. More details in Ft.com’s in-depth report.