Darling asks Rock to consider rival bids by Finance News Bulletin
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Published: 04/12/07
All era are London time Search News in the FTcom siteSearchSearch speech marks in the FTcom sitespeech marksCOMPANIES Financial servicesBreadcrumb trail navigation:FT Home > Companies > By sector > Financial servicesServicesAlistair Darling is hoping Northern Rock’s prospect can be decided before Christmas, as his officials give confidence the troubled bank to look beyond Virgin, its favored bidder, at rival offersThe chancellor expects a bidding war to smash out in the coming days, which he believes will help him secure the best likely outcome for the taxpayer, at present backing loans of more than £22bn to the bank
Last week it seemed the contest was over after Northern Rock selected a group led by Virgin as preferred bidderHowever, in the past three existence, the stakes have been raised, as it emerged that Cerberus, the confidential equity collection, submitted a revised proposal on Friday, as did private equity group JC FlowersIt is understood Mr sweetheart now deems the revised JC Flowers offer an accepted bid”, because it meets the Treasury’s principles for the sale, aimed at getting better the huge community loan advanced to Northern RockThe JC Flowers bid offers to repay £15bn of the taxpayer loan frank, and the remainder in the next three years at a profitable rate of interest
“Clearly it makes sense to have more than one paying attention party, from the taxpayer point of view and also from the point of view of Northern Rock shareholders,” said one official close to the dealAlthough Mr Darling’s officials be adamant he is not setting a time-table, those working on the deal say the chancellor hopes Northern Rock can choose a bidder before Christmas, drawing a line under a embarrassing episode“The government would like this to be resolved rapidly but we require to make sure we get the right deal,” said a orator The Treasury, as the Rock’s biggest creditor, has a veto on any deal and could yet nationalise the bank
JC Flowers, which had talked about taking Northern astound private, indicated it would be flexible about whether the bank would stay a community companyOlivant, the private equity group headed by Luqman Arnold, former leader executive of Abbey National, is due to lodge its full proposal this weekMr Arnold has the support of Northern Rock’s biggest shareholders counting hedge funds SRM and RAB which must vote any contract throughNorthern Rock saw a large loss of deposits in mid-November and the decision to name Virgin as favored bidder halted the rush of withdrawals
One person familiar with the situation suggested that identification a preferred bidder might have given the Northern astound board more time to consider other bidsKey to any bid’s achievement is receiving financing to repay part of Northern Rock’s £22bn of debt payable to the Bank of EnglandVirgin, which is hoping to get financing from regal Bank of Scotland, Citigroup and Deutsche Bank, has about three weeks to safe financing commitmentsDeutsche Bank the past rejected suggestions it was about to walk away from the Virgin deal
Copyright The Financial era Limited 2007In depth: Northern astound - Sep-17JC Flowers makes new ‘flexible’ astound bid - Nov-30Contrasting font battle on Rock face - Nov-30Lex: Valuing Northern Rock - Nov-30Rock seeks completely financed plan from Olivant - Nov-28Sir Brian adds financial power to Virgin quest - Nov-28More from this sectorBlogsBrussels BlogCharles PretzlikClive CrookDear LucyEconomists’ ForumEnergy FilterJohn GapperGideon RachmanTech BlogThe in secret EconomistWestminster BlogWillem Buiter’s MavereconRegional pagesLatin American agendaChinaIndiaBrusselsInteractivePodcastsDebates & pollsAsk the expertMarkets Q&AJobs and classifiedsBusiness for saleContracts & tendersJobs Search Type your look for criteria below:* Minimum delay 15 minutesAll era are London timeFT HomeSite mapContact usHelpAdvertise with the FTMedia centreStudent offersFT ConferencesFT investigate CentreFT SyndicationCorporate subscriptionsFT GroupPartner sites: Chinese FTcomLes EchosFT DeutschlandExpansionInvestors ChronicleExec-Appointmentscom© Copyright The Financial era Ltd 2007 "FT" and "Financial era" are trademarks of
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Two cheers for plan of Rock's would-be rescuer - Published:14/12/07
Luqman Arnold may be a former chief decision-making of Abbey National but he has spent most of his career in investment banking and will have to induce the government his ambitions for Northern astound extend beyond a “quick flip” of the struggling lenderOlivant, his private evenhandedness firm, would take a 15 per cent stake in the lender and would entrust not to sell shares even after the store of England’s crisis loan to the bank was repaid in full in 2009He would become executive chairman in the first instance but then step up to be chairman after appointment of a leader executive, possible from within the companyThe proposal would give the government a 5 per cent bet in Northern Rock if the share price rose considerably That means that if there were a takeover at a best, the UK taxpayer would share in some of the upsideSome scepticism about Mr Arnold’s long-term commitment to Northern Rock is understandable He decided the sale of the troubled Abbey National to Spain’s Banco Santander in 2004 less than two years after taking the helmBut he is quick to protect his achievements at Abbey and maintains it was never his strategy to sell the store“You have to run an organisation for an independent future as you cannot guarantee that someone will want to buy it”, he says “We did the work at Abbey We stabilised it and left it in a stronger place In 18 months, we saved it”He says, if anything, fitting Abbey was a tougher task than fitting Northern Rock, given the former’s complexity He has abundance of transferable experience The two banks share a alike culture, both being ex-mutuals His only regret about his plan at Abbey was a poorly executed rebranding campaign for the branch systemWill this be enough to see Olivant come first Northern Rock It starts on the back foot Sir Richard Branson’s Virgin collection has been appointed preferred bidder However, it does have two important compensationThe first is its suit has the backing of shareholders, some of whom have argued the Virgin suggestion leaves them short-changed Unlike Olivant, Virgin would buy a stake in the commerce at a discount to the current split price The UK Shareholders Association came out in vocal support the past on behalf of retail investorsThe second is Olivant’s investment is little enough not to count as a change of control, which income it could proceed much faster than the March to April schedule envisaged for VirginOtherwise, coffers officials say both proposals satisfy the government’s principles for a auction, the priority being protection of taxpayersThe obstacles to a deal are communal by both bidders The first would be that the Treasury succeeded in enticing JCplants, the US confidential equity firm, back into the auctionAbove all, they require to find banks willing to commit firmly to refinancing Northern Rock: a job that gets harder by the day as the drip of retail depositors from the bank continuesMaverick China sum Profiles: Chinapay, Providing Online sum Solutions for Chinese Banks Maverick porcelain Research12/3/2007$1000Maverick porcelain Payment Profiles: 99Bill, Hot Out of the Gates, but Sustainable Maverick China Research12/3/2007$1000© patent The Financial era Ltd 2007 "FT" and "Financial era" are.
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Two Cheers For Plan Of Rock's Would-Be Rescuer >>
Final IT changes at Abbey - Published:13/12/07
All times are London time Search information in the FTcom siteSearchSearch Quotes in the FTcom siteQuotesCOMPANIES Financial servicesBreadcrumb follow navigation:FT Home > Companies > By sector > monetary servicesServicesEarly next spring Banco Santander, the Spanish bank, will come to an end one of the most determined projects ever undertaken in UK banking when it completes its integration of Abbey NationalIt is the conclusion of a three-year turnround plan unveiled when Santander bought Abbey, Britain’s sixth largest store, for £95bn in November 2004At the time the contract was by far the largest banking contract in Europe, and rival banks are surveillance closely for clues about what type of synergies can be achieved in cross-border dealsMuch of the success of the deal hinged on a fundamental overhaul of Abbey’s 30-year-old legacy IT system Santander argued it could cut Abbey’s expenses by switching its systems to the Spanish bank’s proprietary stage, called PartenonThree years on, Abbey has switched over 70 per cent of the bank’s IT systems to Partenon and the final give up is expected to be completed by next MarchAntónio Horta-Osório, chief decision-making of Abbey nationwide, likens the change to switching from an old truck to a Ferrari“This is probably the main ever systems change in banking and in the UK,” he says “It is done with the aspire of providing a substantial benefit to our customers leaving forward in cost per transaction”Before Partenon was even implemented, Abbey had already slashed its flabby cost bottom, flaking 9,000 jobs – far more than the 3,000 posts expected at the time of the dealIt has also achieved its original target of making £300m of cost investments six months ahead of schedule As a result its cost profits relation – a key measure of efficiency – has fallen from 70 per cent in 2004 to 50 per cent nowRevenues have also risen by 5-10 per cent between 2005 to 2007 and the bank’s 705 branches have been spruced up and incorporated the Santander logo“I say we have to put ourselves ambitious objectives otherwise we will never meet them,” says Mr Horta-Osório a famous Portuguese banker who worked at Citigroup and Goldman Sachs before amalgamation Santander in 1993Though Santander has slash costs at Abbey, it has done so largely through a greater height of redundancies than expectedSantander expects to reap further benefits and an strengthen in revenues by introducing Partenon in the UK but it is still not yet clear that this will create operations more efficientThe new Partenon system surely allows Abbey to process transactions more quickly It also gives branch staff better sales tools Its solitary database lists which products each client has – making cross-selling much easierbefore Abbey’s old IT systems had several different databases with duplicated details of customers making this cross-selling almost not possibleAbbey admits, however, that there have been teething troubles with its implementation of Partenon and a small number of clientele have suffered “some delays”Mr Horta-Osório says: the majority of those issues are related to the legacy systems in Abbey that still have to be connected to Partenon“It’s similar to if you have a Ferrari and you have a rope tied to an old means of transportation and you cannot get the rope until the Ferrari has all the populace on board that were on the truck”Mr Horta-Osório believes Partenon will force revenues at Abbey pointing to the knowledge at Totta, the Portuguese bank that was acquired by Santander in 2000 It was his job to implement the Partenon IT system into Totta and turn the store aroundAt the occasion Totta had a cost income ratio of 53 per cent – above the sector average – and it had 7 per cent split of the country’s profit pond Mr Horta-Osório slashed the cost base by 10 per cent and almost doubled net profit to €340mHe says: “Five years later we had a cost to income relation of 40 per cent and from 7 per cent of profits of the state we went to 14 per cent – we doubled it in five years very similar to what we want to do here in terms of trends,” he saidThe key challenge is boosting Abbey’s enlargement The bank has 18m clientele but 8m of these are classed as inactive and 11m take only one of the bank’s products They have a inferior percentage of their banking relationships with Abbey than do customers of high street payment banksAbbey’s three-year plan envisages shrugging off the bank’s inheritance as predominantly a mortgage and savings bank in order to take on the UK’s five biggest banks in areas such as present financial records, mutual funds and business bankingAs a result, Santander expects Abbey, which had been losing market share in recent existence, to continue to raise revenues by 5 to 10 per cent by 2009Mr Horta-Osório says: “We are persuaded we have a lot of organic potential in front of us We comprehensive our public commitment of growing revenues from 5 per cent to 10 per cent a year until 2009”A input way for Abbey to get together its targets is to drive up the number of products it sells to obtainable customers – helped by the up to day information from Partenon – whilst maintaining its inferior cost baseIf Abbey drives up cross-sales by 25 per cent, then this could give 2-3 percentage points of additional income growth over the next five years Abbey aims to do this by using its bough employees and is planning to augment its 705-strong network by a further 300 branches by 2010To this end it has distorted the way it is remunerating branch staff so they are incentivised in a different way to expand investments and investments on a net basisIt is also leveraging Santander’s worldwide know-how to develop new products in areas such as mutual money, insurance and credit cards It is expanding its offering in business banking and aid to wealthy customersLast year, for example, Abbey severed an outsourcing contract with US credit card issuer MBNA and brought its credit card process back in-house using Santander’s global know-how in cardsFrom selling 3,000 cards a week in mid-September through its bough network it is now selling 12,000 cards a week “That is an instance of how we can increase our cross-sales,” says Mr Horta -OsórioMr Horta-Osório also believes Abbey is well positioned in the praise squeeze known it has been reining back on mortgage lending in the cut-throat mortgage market for the past day and has been driving up investments and asset managementAbbey, which has a 94 per cent share of the in general UK mortgage market, now aims for mesh new mortgage lending of between 6 per cent and 7 per cent – although it expects to be at the upper finish of its net lending target by the year endHe also stresses it has little reliance on the wholesale markets in conditions of short-term financial support Around 60 per cent of financial support is provided by sell deposits“In terms of liquidity we have less than 10 per cent of our retail assets financed by wholesale temporary funding which is much better than the average of the division we were prepared to an environment such as this,” he saysCopyright The Financial Times incomplete 2007António Horta-Osório, CEO of Abbey National – CV - Dec-09MPS defends €9bn Antonveneta contract - Nov-09Chairman exultant at quickfire contract - Nov-09MPS shares slump after Antonveneta deal - Nov-09Why overseas banks are battling for Italian assets - Apr-11Credit squeeze will not strike Santander lending - Oct-26More from this sectorMaverick China Payment Profiles: Chinapay, as long as Online sum Solutions for Chinese Banks Maverick China Research12/3/2007$1000Maverick China Payment Profiles: 99Bill, Hot Out of the Gates, but Sustainable Maverick porcelain Research12/3/2007$1000BlogsBrussels BlogCharles PretzlikClive CrookDear LucyEconomists’ ForumEnergy FilterJohn GapperGideon RachmanTech BlogThe in secret EconomistWestminster BlogWillem Buiter’s MavereconRegional pagesLatin American agendaChinaIndiaBrusselsInteractivePodcastsDebates & pollsAsk the expertMarkets Q&AJobs and classifiedsBusiness for saleContracts & tendersJobs Search Type your look for criteria below:* Minimum delay 15 minutesAll era are London timeFT HomeSite mapContact usHelpAdvertise with the FTMedia centreStudent offersFT ConferencesFT SyndicationCorporate subscriptionsFT GroupPartner sites: Chinese FTcomLes EchosFT DeutschlandExpansionInvestors ChronicleExec-Appointmentscom© Copyright The Financial era Ltd 2007 "FT" and "Financial era" are trademarks of The Financial era Ltd.
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Final It Changes At Abbey >>
Flowers pulls out of Rock auction - Published:07/12/07
All occasions are London occasion Search News in the FTcom siteSearchSearch Quotes in the FTcom siteQuotesCOMPANIES monetary servicesBreadcrumb trail navigation:FT Home > Companies > By sector > Financial servicesServicesJC Flowers, the private equity group has walked away from the offer auction for Northern Rock, the suffering bankThe US group, which submitted a revised suggestion last week, is understood to have sent letters to Northern astound and to the Treasury last night saying that it could not give a revised offer that would both provide value to shareholders and please government supplies on the sale of Northern RockThe JC Flowers proposal, which proposed repaying £15bn of Bank of England financial support, would have only given shareholders a nominal amount even though their support would be needed to get the bid throughIt is unspoken that during meetings with Northern Rock this week, JC Flowers concluded that it did not see how it could meet its own financial obstacle rates while satisfying the government and shareholdersJC Flowers has now made it obvious it will not hold any more meetings or do further work on a revised offer “unless the parameters change”Northern Rock is also expected to receive a revised suggestion today from Olivant, the private equity collection led by Luqman Arnold, a former Abbey National chief decision-making, which will see him parachute new management into the collection Cerberus, the private equity collection, is still thought to be interestedThe bank has on loan about £25bn from the Bank of England and it is thought to be considering a figure of different fallback options, including going into “run rotten – not taking on new business – should its sale failThis prospect includes running down its mortgage book over a period of occasion and selling certain assets to shrink its balance sheetThis form of winding down the corporation would not engage Northern Rock’s being nationalised or put into administrationIt could also allow Northern Rock to take benefit of financing packages being wrinkled up by a number of banksNorthern Rock could borrow against some mortgage possessions and potentially pay back part of the Bank of England loan and the relax over a period of yearsThe Virgin consortium still has to finalise financing as it tactics to pay back more than £11bn of Bank of England fundingHowever a person shut to the situation supposed financing was likely to be difficult and profitable banks providing financing could require better collateral to set against the loanThe commercial banks are responsibility due diligence and are now conducting detailed discussions about the financing counting the kind of collateral which could be used to set against a loanThe amount borrowed from the Bank of England has increased by £600m–£650m since last week, of which semi was due to savers withdrawing their cash from the bank It said the speed of savings withdrawn from the bank had slowed in the past fortnight since the Virgin group was named as preferred bidderNorthern Rock, tactics to give its 1m savers a Christmas bonus, rising the savings rate it pays by 500 foundation points in December and JanuaryCopyright The Financial Times Limited 2007earth View: Rock response risks undermining London - Dec-06Warning of astound problems tarnishing London - Dec-06Olivant puts its indicator on Rock - Dec-05Brussels approves Rock rescue aid - Dec-05In depth: Northern Rock - Sep-17JC plants attempts to revive N Rock bid - Dec-04More from this sectorMaverick China sum Profiles: 99Bill, Hot Out of the Gates, but Sustainable Maverick China Research12/3/2007$1000Maverick China Payment Profiles: Chinapay, as long as Online Payment Solutions for Chinese Banks nonconformist China Research12/3/2007$1000BlogsBrussels BlogCharles PretzlikClive CrookDear LucyEconomists’ ForumEnergy FilterJohn GapperGideon RachmanTech BlogThe in secret EconomistWestminster BlogWillem Buiter’s MavereconRegional pagesLatin American agendaChinaIndiaBrusselsInteractivePodcastsDebates & pollsAsk the expertMarkets Q&AJobs and classifiedsBusiness for saleContracts & tendersJobs Search Type your look for criteria below:* Minimum holdup 15 minutesAll times are London timeFT HomeSite mapContact usHelpAdvertise with the FTMedia centreStudent offersFT ConferencesFT SyndicationCorporate subscriptionsFT GroupPartner sites: Chinese FTcomLes EchosFT DeutschlandExpansionInvestors ChronicleExec-Appointmentscom© Copyright The Financial Times Ltd 2007 "FT" and "monetary Times" are trademarks of.
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Flowers Pulls Out Of Rock Auction >>
