An investor group led by the former head of bank Abbey is preparing a proposal for the board of Northern Rock that would avoid a sale or breakup, triggering an 11% jump in the battered UK lender's shares.
In a statement confirming weekend reports, investor group Olivant said it would propose taking a minority stake in Northern Rock and introducing 'a core team' led by ex-Abbey boss Luqman Arnold, who would become chief executive.
The proposal, days ahead of a Friday deadline for bids, is not an offer for shares in Northern Rock, the group said.
The Sunday Times had said the proposal for Britain's biggest casualty of the credit crunch would involve acquiring an equity stake of between 10-20%, with Arnold replacing current boss Adam Applegarth, who would leave the company.
The Sunday Telegraph reported Arnold has held informal talks with Northern Rock Chairman Bryan Sanderson and that Arnold's request for exclusivity in bidding for the bank was denied.
Some five years ago Arnold was brought in to rescue Abbey, Britain's fifth-largest bank, after problems with its wholesale banking arm. The bank was later sold to Spanish bank Santander.
Among potential bidders for Northern Rock are Richard Branson's Virgin Group-led consortium and US buyout firm JC Flowers which have both confirmed their interest. Cerberus, another Wall Street firm, is also interested, sources familiar with the situation have said.
