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Northern Rock bidder to drop out Northern Rock bidder to drop out
(10 minutes later)
One of the participants in the auction of Northern Rock is about to drop out of the process, the BBC's business editor Robert Peston says.One of the participants in the auction of Northern Rock is about to drop out of the process, the BBC's business editor Robert Peston says.
The bidder is the Tyne consortium, which includes the Welsh entrepreneur Alf Gooding and the US private equity house Five Mile.The bidder is the Tyne consortium, which includes the Welsh entrepreneur Alf Gooding and the US private equity house Five Mile.
Tyne Consortium was not a frontrunner in the auction, in which Virgin is currently the preferred bidder.Tyne Consortium was not a frontrunner in the auction, in which Virgin is currently the preferred bidder.
There are three other potential bidders involved in the process.There are three other potential bidders involved in the process.
They are Olivant, headed by former Abbey boss Luqman Arnold, and two other private equity firms: JC Flowers and Cerberus.They are Olivant, headed by former Abbey boss Luqman Arnold, and two other private equity firms: JC Flowers and Cerberus.
Nationalisation of the Rock may yet turn out to be the best of some unattractive options Robert Peston, BBC business editor Read Robert Peston's blog href="http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/shares/3/23193/one_month.stm">Northern Rock share price Nationalisation of the Rock may yet turn out to be the best of some unattractive options Robert Peston, BBC business editor Read Robert Peston's blog href="http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/shares/3/23193/default.stm">Northern Rock share price
Mr Peston said Tyne was frustrated with the process because it was unclear whether it was dealing with Northern Rock or the Treasury.Mr Peston said Tyne was frustrated with the process because it was unclear whether it was dealing with Northern Rock or the Treasury.
The bidding for Northern Rock is complicated because officially it is up to the board and shareholders of the bank to decide to whom it is sold.The bidding for Northern Rock is complicated because officially it is up to the board and shareholders of the bank to decide to whom it is sold.
But the Treasury clearly has a big say in the process because the Rock is only able to trade because of more than £25bn of loans it has received from the Bank of England.But the Treasury clearly has a big say in the process because the Rock is only able to trade because of more than £25bn of loans it has received from the Bank of England.
Mr Peston said nationalising the troubled company "may yet turn out to be the best of some unattractive options".Mr Peston said nationalising the troubled company "may yet turn out to be the best of some unattractive options".
The Daily Telegraph reported on Wednesday that the government has been preparing for that outcome and is having a nationalisation bill drafted in case it cannot sell the bank.The Daily Telegraph reported on Wednesday that the government has been preparing for that outcome and is having a nationalisation bill drafted in case it cannot sell the bank.
Gordon Brown was asked about whether Northern Rock would be nationalised at Prime Minister's Questions.Gordon Brown was asked about whether Northern Rock would be nationalised at Prime Minister's Questions.
"All options are on the table but we are trying to find a private buyer," he said."All options are on the table but we are trying to find a private buyer," he said.
Rescue aidRescue aid
But there was good news for the government with a ruling from the European Commission that its rescue package for Northern Rock was within state aid rules.But there was good news for the government with a ruling from the European Commission that its rescue package for Northern Rock was within state aid rules.
It said that the initial emergency loan from the Bank of England did not count as state aid because it was secured by Northern Rock's assets and the bank is paying interest.It said that the initial emergency loan from the Bank of England did not count as state aid because it was secured by Northern Rock's assets and the bank is paying interest.
But it concluded that later actions such as the guarantee of all deposits in Northern Rock did count as state aid.But it concluded that later actions such as the guarantee of all deposits in Northern Rock did count as state aid.
"These aid measures can be authorised as rescue aid in line with Community guidelines for rescuing and restructuring firms in difficulty," the Commission said in a statement."These aid measures can be authorised as rescue aid in line with Community guidelines for rescuing and restructuring firms in difficulty," the Commission said in a statement.
These rules only allow rescue funding for the first six months.These rules only allow rescue funding for the first six months.
The government has promised to give the Commission an update on what it plans to do beyond the middle of March.The government has promised to give the Commission an update on what it plans to do beyond the middle of March.