Northern Rock suitor JC Flowers today unveiled a heavyweight management line-up for the stricken mortgage lender as talks over a possible offer continue.
The private equity firm confirmed that former Marks & Spencer chairman Paul Myners – who fought off a hostile offer for the retailer from Philip Green - will be the chairman of the company if the talks lead to a successful offer.
Other big-hitters include former Alliance & Leicester chief executive Richard Pym, who would become Northern Rock’s interim chief executive.
JC Flowers faces opposition from a consortium led by Richard Branson’s Virgin to take over the Newcastle-based company.
Soaring borrowing costs in the summer’s credit crunch forced Northern Rock to turn to the Bank of England for emergency funding in September, sparking the first run on a UK bank in nearly 150 years. The company has borrowed more than £20bn (€28.6bn) so far.
JC Flowers' prospective team also includes Northern Rock's former chief financial officer Bob Bennett, ex-Abbey National chief executive Peter Birch and Martin Jacomb, a former chairman of insurer Prudential, as advisers.
While the private equity suitor confirmed “continuing discussions” with Northern Rock, it added that there were no guarantees over whether it would press ahead with an offer.
The mortgage lender’s crisis claimed its first scalp last week when the company’s board accepted the resignation of chairman Matt Ridley. He has been succeeded by Bryan Sanderson, a former BP director.
Chief executive Adam Applegarth is also set to leave the group, which employs 6,000 staff, when a rescue deal is concluded.
Its Virgin-led rival reportedly plans to inject £1.5bn (€2.1bn) in return for a controlling stake in the group, which it wants to rebrand as Virgin Money.
In evidence to MPs yesterday, Chancellor Alistair Darling warned that the bank had “a matter of weeks and months” to sort out its future.
The Government was forced to step in to guarantee the deposits of savers to deter the queues at branches last month – a pledge later extended to include new customers of the group.
Northern Rock has been in turmoil because it relied heavily for its mortgage lending on money markets. Since August banks have become more cautious due to fears of exposure to losses on high-risk US mortgages.
The company had a stock market value of around £5bn (€7.1bn) in February this year, but this has slumped to less than £1bn (€1.4bn) following the crisis.