This is NOT a bid for stricken mortgage lender Northern Rock. Repeat: this is NOT a rescue takeover of Northern Rock. Witness the formal statement issued on Monday by Olivant, Luqman Arnold’s Jersey-based quasi-private equity investment group:
Olivant is not proposing an offer for the shares of Northern Rock.
What Arnold and his team are doing is “preparing a proposal.” They’d like to run Rock – on an intensive operational basis, working alongside the existing board and management. And, so as to “ensure Olivant’s alignment with the board and shareholders,” the Luqmanites would subscribe for a minority stake in the mortgage bank.
So, what we don’t know about this non-bid is just what chunk of Rock that Olivant wants for its efforts, whether it expects to pay anything for its holding – and, if so, at what price.
But Arnold’s interjection in the Rock affair is intriguing, if only for the fact that he is one of the few people on earth who has real, hands-on experience of resuscitating a British mortgage operator that has been caught out playing complex financial instruments the management didn’t quite understand.
It was Arnold, a decorated investment banker and former president of UBS, who was parachuted into
Abbey National five years ago to work with newly appointed finance director Stephen Hester. Together the pair had to unwind a toxic treasury operation at Abbey which had more than £100bn of suspect assets on its books.
Abbey, under its previous chief executive Ian Harley, had pretentions to being a top 10 global bank – using wholesale financing to stretch its balance sheet spectacularly. But it came unstuck after the TMT bubble burst and the likes of Enron and WorldCom went bust.
While it was never publicly acknowledged at the time, the work by Luqman and Hester amounted to a covert rescue of a major British high street bank – which (thankfully) is an unusual thing to have on your CV.
On Monday, shares in Rock jumped nine per cent at the opening to 158p.