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The British government has prepared emergency legislation to nationalise the distressed Northern Rock bank if a rescue falls through, a newspaper report said on Wednesday.
Northern Rock, already bailed out temporarily with a government loan, is the target of an offer by the Virgin group and is being courted by other buyers, but the government is ready to rush through nationalisation if all approaches fail, the Daily Telegraph reported.
The government had ordered its legal experts to draft legislation "so that it is there as a fallback option should attempts to sell Northern Rock fail," the report said, adding that the treasury department had declined to comment.
The newspaper also said the government had approached the main opposition Conservative Party in the hope that with their co-operation the bill could be rushed through both houses of parliament in a single day if necessary.
A week ago a consortium led by Virgin Group, controlled by British business tycoon Richard Branson, emerged as the preferred buyer for Northern Rock which has already been rescued with an emergency loan from the government of about 25 billion pounds (35 billion euros, 51 billion dollars).
The report said the Labour government continued to press Northern Rock to negotiate a rescue by Christmas. A finance ministry spokesman repeated that the government preferred that the bank be bought by a private group.
Northern Rock, the leading home-loan lender in the north east of England, was brought to the verge of collapse by repercussions of the crisis in the US mortgage sector and resulting tensions in the money market.
Press reports say the bank is being courted by several potential bidders, including two US funds JC Flowers and Cerberus, and the Olivant investment group headed by the former head of Abbey bank Luqman Arnorld.
The government wants to recover its loan to Northern Rock and on Wednesday EU regulators approved the way in which ministers provided emergency support, saying "the measures comply with EU rules on rescue aid."
Source: http://business.maktoob.com/NewsDetails-20070423133399-Britain_ready_to_nationalise_Northern_Rock_if_rescue_bid_fails_report.htm
