Investment giant contemplating bid after George Osborne opens door to sale of nationalised bank.

American private equity group Blackstone is considering a £1bn bid for Northern Rock, the bank nationalised by the government in 2008 which George Osborne said this week would be returned to the private sector.

Headed by billionaire Stephen Schwarzman, Blackstone is hoping for a repeat of its successful investment in BankUnited of Florida, which it acquired with partners at the height of the financial crisis. BankUnited collapsed in 2009, but was bought by a consortium including Blackstone for $945m in 2009 then floated for $2.6bn on Wall Street in January. Investors almost tripled their money.

Blackstone's interest in Northern Rock will alarm critics of private equity who accuse the industry of short-termism and asset-stripping.

Schwarzman's firm has been under fire over Southern Cross, Britain's biggest care homes operator, which is struggling to avoid administration. Blackstone owned it between 2004 and 2006 and has been accused by the GMB union of supporting a business model that left Southern Cross with an unsustainable rent bill – accusations Schwarzman rejects.

Analysts say Blackstone will scrutinise the information memorandum on Northern Rock, which will be circulated to interested parties in the next few weeks.

It is thought Blackstone could bid alone for Northern Rock, which is said by experts to be worth little more than £1bn, or ally itself to another bidder. But Schwarzman faces intense competition, with Virgin Money, National Australia Bank, the Coventry and Yorkshire building societies, investment groups NBNK and Olivant, as well as Tesco Bank, in the......Read more HERE on this story




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