American group eye £1bn bid for Northern Rock

An American private equity group is considering a £1bn (€1.13bn) bid for UK nationalised lender Northern Rock, it was reported today.

An American private equity group is considering a £1bn (€1.13bn) bid for nationalised lender Northern Rock, it was reported today.

Blackstone, headed by billionaire Stephen Schwarzman, is hoping for a repeat of its successful investment in BankUnited of Florida, which it acquired with partners at the height of the financial crisis, The Observer said.

The firm, however, has been criticised recently over its involvement with Southern Cross, Britain's biggest care homes operator, which is struggling to avoid administration.

Blackstone owned Southern Cross between 2004 and 2006, and has been accused by the GMB union of supporting a business model that left Southern Cross with an unsustainable rent bill - accusations which Mr Schwarzman rejected.

Elsewhere, the Mail on Sunday said details on the proposed sale of Northern Rock could be issued to potential bidders within the next ten days.

Blackstone could bid alone for Northern Rock, which is said by experts to be worth little more than £1 billion, or ally itself to another bidder.

But Mr Schwarzman faces intense competition, with Virgin Money, National Australia Bank, the Coventry and Yorkshire building societies, investment groups NBNK and Olivant, as well as Tesco Bank, in the running.

Chancellor George Osborne announced his intention to auction Northern Rock in his Mansion House speech earlier this week.

Northern Rock was nationalised in February 2008 after it collapsed amid the credit crisis, sparking the first run on a UK bank for 150 years.

The Government split Northern Rock in two last year, forming a mortgage and savings bank called Northern Rock Plc and Northern Rock Asset Management (NRAM) to house the more toxic loans.

It is the former half - the so-called good bank - which is preparing to return to private ownership.

Earlier this year, the Government launched a tender for advisers - won by Deutsche Bank - to look at options for Northern Rock, including a possible sale.

A buyer of Northern Rock could also acquire the 600-strong branch network being sold by Lloyds.