Alexa
  • Directory of Taiwan

Report: US financial giant GMAC to back bid for UK's struggling Northern Rock

Report: US financial giant GMAC to back bid for UK's struggling Northern Rock

GMAC, the U.S. financial services group, will spearhead a rescue bid for Britain's struggling mortgage bank Northern Rock PLC, a newspaper reported Sunday.
The Sunday Times said GMAC, half owned by the car giant General Motors, will play a pivotal role in a bid being put together by Cerberus Capital Management LP, the New York private equity house.
The paper said Cerberus, which owns a controlling 51 percent state in GMAC, is one of three bidders now examining Northern Rock's books for possible takeover bids.
The others are the U.S. private equity firm J.C. Flowers & Co. and Richard Branson's Virgin Group.
The newspaper did not identify the source of its report. Both GMAC and Cerberus declined to comment Sunday.
Another newspaper, The Sunday Telegraph, reported that J.C. Flowers & Co. is demanding that Britain's government offer insurance against any legal action that could arise from a Flowers' takeover and underwrite any new mortgages written by Northern Rock.
Northern Rock has been Britain's biggest casualty of the global credit crunch. The mortgage lender ran into trouble last month because of its heavy reliance on short-term money markets for funding. Its subsequent profit warning and appeal to the Bank of England for an emergency loan led to the first run on a British bank for almost a century.
The rush was only stemmed days later when the government stepped in to guarantee deposits of Northern Rock savers.
Analysts have said an inspection of the Bank of England's accounts showed that Northern Rock's borrowing is likely to have exceeded 20 billion pounds (US$41.1 billion; euro28.7 billion). That figure appears in the "other assets" category of the central bank's accounts, which includes any funds the bank issues as "lender of last resort."
British Treasury chief Alistair Darling has warned Northern Rock that it has only "a matter of weeks and months" to sort out its future.
___
On the Net:
http://www.northernrock.co.uk
http://www.gmacfs.com