GMAC, PE cos likely to unveil rescue bid for Northern Rock

LONDON: US financial services group GMAC will lead a rescue bid for stricken bank Northern Rock, according to a media report on Sunday. The Sunday Times, which did not cite its source, reported that GMAC would play a key role in a bid being assembled by US private equity group Cerberus.

Cerberus — which owns 51% of GMAC — is one of three suitors conducting due diligence on Northern Rock’s accounts. Northern Rock faces take-over interest from US private equity firm JC Flowers. Richard Branson’s Virgin Group wants to lead a separate consortium rescue plan.

Since early August, world financial markets have been rocked by a global credit squeeze, which resulted in a funding crisis for Northern Rock. In September, the group was forced to ask for financial help from the Bank of England — sparking the first run on a British bank in living memory.

Commercial banks have become nervous about lending cash amid fears over possible exposure to the US housing market slump — creating a so-called credit crunch. Northern Rock is Britain’s fifth-largest provider of home loans or mortgages.