Rock's crunch time

14 January 2008 By Mike Verdin

For the UK government, taking the ailing lender on its books would be a huge embarrassment, but it may have to bite the bullet. It s appointed a credible potential boss. Shareholders might still have a legal case, but they would be wrong to dismiss this move as a bluff.

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The UK government is expected to decide by the end of the month on its preferred option for Northern Rock, the ailing mortgage lender, according to people familiar with the situation.

Alternatives include nationalising the bank or putting it into administration. The UK government, which is being advised by Goldman Sachs, has lined up Ron Sandler as executive chairman of Rock should it nationalise the bank.

The bank is also considering bids from a Virginled consortium and from Olivant, a private equity fund headed by former Abbey National and UBS boss Luqman Arnold.

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