Virgin eyes Northern Rock
Virgin has confirmed it is looking to make a bid for troubled mortgage lender Northern Rock.
Northern Rock's share price rose today as it emerged Sir Richard Branson's Virgin Group was in talks to takeover the bank.
Following media speculation, a Virgin Money spokesperson said: "We are looking at the opportunity."
He went on to tell Dow Jones Newswires that reports in the press were "broadly accurate".
Virgin first contacted Northern Rock three weeks ago and a deadline of the end of the day today has been set by the bank's adviser Merrill Lynch for proposals for a buyout.
Any bidder for Northern Rock will find its low share price - rising ten per cent today to 268p but still way below its 52-week high of 1,258p - make the lender a bargain.
However, Northern Rock has borrowed an estimated £12.9 billion from the Bank of England, according to New Star analysis of the Bank of England's balance sheet. A new owner would also have to convince the markets to start lending to the bank again.
For Virgin to make a bid for the bank it would need backing from a private equity group.
However, other private equity groups - including US firms JC Flowers and Cerberus - have been linked with Northern Rock, but Virgin would be preferred by many as it would be most likely to keep the group together - under a rebranding.
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