The board of Northern Rock has submitted a revised offer to buy out the troubled British bank, upping the amount of money it is prepared to pump in, it said Friday. The company said in a statement that the changes do not significantly alter the underlying business plan it submitted on February 4, which would see the ex-boss of insurer Resolution, Paul Thompson, head the restructured bank. But instead of at least 500 million pounds (668 million euros, 980 million dollars) in new equity pumped in, that would be increased by not less than 200 million pounds, it added.
There would also be "an improvement in the economic returns to HM Treasury and the government for providing ongoing financial support to the company," it said. "The board continues to believe that the revised restructuring proposal, once implemented in full, will result in an independent, well-capitalised, low cost and low risk mortgage and savings bank," the company said. "The board also believes that the revised restructuring proposal is capable of meeting all the objectives publicly announced by the Tripartite Authorities (Bank of England, Financial Services Authority watchdog and HM Treasury)." Northern Rock's board is vying with Richard Branson's Virgin Group to take control of the bank, which nearly went under in September last year in the fall-out from the US subprime mortgage sector crisis. Its application for emergency central bank loans to stay afloat prompted panic at its branches as savers queued to withdraw their cash, with a resulting knock-on effect on confidence in the banking sector. Branson plans to relaunch Northern Rock under the name Virgin Bank and provide a 1.25-billion-pound injection of fresh capital, including 500 million pounds generated through a rights issue priced at 25 pence per share.
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