Press
Rock rescue offer 'denied' by Bank
23rd January 2008
Lloyds TSB was denied the liquidity needed to snap up Northern Rock, a question from a small shareholder revealed.
The revelation was made during the question and answer session of Northern Rock's extraordinary general meeting held at the Metro Radio Arena in Newcastle.
The meeting was called by RAB Capital and SRM, two hedge funds that between them own about 18 per cent of the lender. One of the hundreds of Northern Rock shareholders that attended the meeting asked why they had been denied the opportunity to benefit from the interest shown by Lloyds TSB.
Responding to the question, Sir Ian Gibson, non-executive director of Northern Rock, said between August, when the crisis first began, and September, when the lender went to the Bank of England of assistance, the Northern Rock board and its advisers had been in discussions with several banks both in UK and beyond.
He said discussions had centred on the possibility of selling all or part of the bank in order to avoid what eventually happened.
He said: "We did not name names as there were quite a few of them but the bank you mentioned was one that was talking to us and we were talking to them throughout the period and it did seem there was a real possibility of a deal."
Sir Ian said although there was nothing contractual tabled by Lloyds TSB, he understood the bank was denied the liquidity it needed to make an offer for Northern Rock.
He said: "None of us outside the Bank of England can know what transpired there. It withdrew from the scene with its discussions."
James Carter, principal for London-based IFA Independent James, said a Lloyds TSB takeover would have been the most logical step.
He said: "Obviously the correct discussions were not taking place. The government has not shrouded itself in glory."
Lloyds TSB declined to comment.