NORTHERN Rock is not seeking a buyer despite reports yesterday that Tesco was the latest institution to enter the fray.
It was claimed that the supermarket, which has branched out into financial services in recent years, was a potential bidder for the nationalised bank, as was Virgin, which has tried to buy the bank before, and some private equity funds.
Both North-East-based Northern Rock and Tesco said yesterday that they did not comment on market speculation.
But sources indicated last night that there would be no attempt to sell the bank while it was going through a restructuring process that still requires European approval.
It emerged last week that the bank would be split in two as BankCo and AssetCo later in the year.
It forms part of the wider business plan that will see Northern Rock significantly slow its rate of mortgage redemptions and carry out new mortgage lending of up to £14bn over the next two years.
Last night, a source with indepth knowledge of Northern Rock said: “There is no sales process in place.
“The bank has to get through its state aid approval and restructuring process before there are any other considerations.”
The ongoing efforts to transform Northern Rock yesterday saw the loss-making bank’s capital fall below the minimum regulatory requirements stated by the Financial Services Authority (FSA).
However, the Government pledged in August last year that it would put up to £3bn into the bank to meet the expected capital shortfall once the revised business plan and restructuring is approved.
That approval is still to come from the European Commission, which must be satisfied that the business plan does not breach European state aid rules.
Under those rules, the aid package for the bank has to be the minimum necessary to enable it to return to long-term viability.
A Northern Rock spokesman said: “In the period prior to the provision of further capital, Northern Rock will continue to operate as normal.
The FSA has confirmed that it does not currently intend to restrict the activities of the company while the plan is implemented to address its capital position.
“The FSA will continue to monitor the firm’s position closely.”
Under the restructuring plan, BankCo will hold savers’ money and carry out the new lending as well as holding some mortgages, while Asset- Co will hold the rest of the mortgages and be responsible for repaying the outstanding £8.9bn of the Government’s loan to the bank.
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