Leading figure enters list to take over Rock
Nov 12 2007 By Graeme King, The Journal
A MAJOR figure in the banking world has entered the bidding process to take over stricken Northern Rock – and is said to want the business to stay independent in the North-East. Luqman Arnold, 57, is the former boss of Abbey and is known as one of the City’s most experienced bankers.
He is thought to be drawing up a proposal that does not involve the sale or break-up of the Newcastle-based bank, and wants to work alongside Northern Rock managers to turn the bank around, with the help of a team of hand-picked executives.
He also wants to keep the business based in its North-East heartland, it is believed, and to keep the Northern Rock brand, despite the battering it has suffered in recent weeks.
Mr Arnold’s company Olivant is also thought to recognise the value of the Northern Rock Foundation and would want it to continue its work in the North-East.
But there has been no commitment to employee numbers as yet – though sources say Mr Arnold would talk to the Unite union about staffing.
Insiders in the banking industry say Mr Arnold and his team have concerns about the way the bank’s management has handled the business since its troubles emerged in such spectacular fashion – criticising a lack of communication which has allowed rumours to go unchecked.
The team behind Mr Arnold are said be Brian Keane, a former investment banker with Deutsche Bank, Mitchel Lenson, former group chief information officer at Deutsche Bank, Alan Morgan, a former senior partner at McKinsey, Kirk Stephenson, former chief operating officer of law firm Bruckhaus Derringer, Newcastle United chairman Chris Mort’s firm, and Peter Strafford, a former senior investment banker at UBS and Goldman Sachs.
Details of Mr Arnold’s proposals are expected to be finalised ahead of this Friday’s deadline set by Northern Rock’s advisers for bids to be submitted.
The plan is reported to have the support of a number of Northern Rock investors, and Olivant is thought to have received some support from new Rock chairman Bryan Sanderson.
The scheme would apparently involve Mr Arnold acquiring an equity stake of between 10% and 20%, and he would see a return on his investment only if the company’s value went up – choosing not to take a salary, advisory fees or any bonuses.
Mr Arnold and his team from Olivant have intervened in similarly crisis-hit companies before, most notably Abbey, and consider themselves experts in crisis management.
Mr Arnold has not revealed his detailed plans on plugging the multi-billion-pound hole in Northern Rock’s finances, but his approach is known not to be backed by private equity.
Graham Goddard, deputy general secretary of the Unite union, said: “We will be looking for promises on job security and terms and conditions to be kept.
“There are people in the frame, and if they are successful (in taking over Northern Rock) we would want to be involved in discussions with them.”
Newcastle-based PR company boss Robin Ashby, who speaks for the Northern Rock Small Shareholders Group, said: “This is clearly someone who can see the value in this business which is what we small shareholders have been pointing out for some time now.
“This is a variant on Northern Rock surviving as an independent, publicly quoted company based in Newcastle, so it’s an interesting proposition, but we don’t yet have the data to know if it’s a viable proposition, or just corporate raider opportunism.”
Brian Giles, communications director for Northern Rock, said: “There is a formal process through which all participants are invited and encouraged to make their proposals.
“We are talking to a number of third parties about a variety of different types of transaction.”
Neither Bryan Sanderson nor anyone from the Northern Rock Foundation were available to comment last night.
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Banker makes a habit out
The company’s chief executive, Arnold transformed the fortunes of the struggling High Street Abbey National, completely restructuring the bank and re-naming it Abbey.
The business tycoon simplified Abbey’s out-of-date image and its advertising before selling it on to Spanish bank Santander.
In total, the 57-year-old has spent 35 years in commercial, investment and retail banking, as well as the related areas of insurance and asset and wealth management.
He has served on a number of industry and regulatory bodies, including acting as chairman of the Design Museum.
He is also a Trustee of the Architecture Foundation, advising clients in the fields of art and architecture as well as finance.
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Predators circling
Sir Richard Branson’s Virgin Group Ltd is a collection of separately-run companies that each use the Virgin brand.
Branson has announced that he would wish to relaunch Northern Rock as Virgin Money, adding another business area to his core business areas of travel, entertainment and lifestyle.
New York-based Cerberus Capital Management is one of the world’s leading private investment firms, specialising in the transformation of ailing or “undervalued” companies.
It is run by its founder, 47-year-old financier Steve Feinberg.
Also based in New York City, JC Flowers & Co. is a private equity firm established in 2001 by J Christopher Flowers, who is ranked 799th in the World Billionaires List 2007.
