Northern Rock deadline nears

Virgin Group, Olivant and Northern Rock's own management will today submit their final bids for the troubled bank as the government deadline nears.

As a result of the US subprime mortgage meltdown, Northern Rock had to write-down about £24 billion and was bailed out by the Bank of England in an emergency move.

The ordeal led to the first run on a UK bank in more than 140 years and forced chancellor Alistair Darling to convert the taxpayer debt into government-guaranteed bonds to encourage private-sector investment.

The three bidders have until afternoon today to announce their official offers. If a private-sector solution cannot be settled, the government may be forced to take direct ownership.

Despite pressure to do so, Sir Richard Branson, owner of Virgin Group and the frontrunner in the Northern Rock bidding, has refused to change his offer.

Virgin's offer, which proposes taking a large stake of the mortgage bank and a large injection of new equity to the firm, has so far failed to win backing from the failed mortgage bank's shareholders.

"We believe we will create a very strong bank in the future and we hope to make sure the taxpayers will get all their money paid back," said Sir Richard.

Olivant, headed by Luqman Arnold, former head of Abbey National, and the in-house rescue plan headed by Paul Thompson, a manager at Northern Rock, are expected to make official bids today along with Sir Richard.

Any of the three offers will need to secure at least £750 million in order to provide enough financing as well as reduce the company's overall size, including jobs, to cut costs.

The Treasury will make a recommendation to the board of Northern Rock after reviewing the proposals today.

Shares of Northern Rock have picked up a little over four per cent to 100p in early trading as investors anticipate today's bidding. The bank is now worth less than a tenth of its value as of 12 months ago.