NBNK set to crash state sale of Rock
NBNK Investments, headed by chief executive Gary Hoffman, has approached the board of Northern Rock about making a bid for the bank, which Hoffman used to run.
The board and UKFI, the state agency that manages the government’s investment in the Rock, have given Hoffman permission to join the first round of bidding despite NBNK having been formally barred from doing so until November.
Hoffman had been banned because it was judged that his familiarity with the assets could give him a big advantage over other bidders.
But City A.M. revealed in August that NBNK was nonetheless looking at tabling a bid because the auction was running behind schedule (see inset). UKFI’s decision means that Hoffman does not have to wait an extra week and can make an offer before the end of the month.
The move will see NBNK become an interloper in what had been a re-run of the 2007 bidding war between JC Flowers and Virgin Money, which both tried to buy the Rock before the crisis.
Both Virgin and JC Flowers are mulling bids that are likely to be around £850m – far below the Rock’s start-up equity of £1.4bn, injected by taxpayers.
UKFI and Northern Rock believe that NBNK’s arrival on the scene “is in the best interests of the UK taxpayer” because it makes the sale more competitive, said a source familiar with the deal.
Snapping up the Rock could make sense for NBNK because it would give Hoffman an IT platform and a large surplus of deposits onto which it could bolt the 632 Lloyds branches it is trying to buy.