LONDON (Thomson Financial) - All three bidders for Northern Rock have been told by the government that they will have to accept a performance warrant to allow the government to share in any financial recovery of the stricken mortgage bank, the Sunday Times reported.
The warrant, which can be converted into shares at a future date, will safeguard the government from a successful bidder making huge future profits at the public expense, the paper said.
The warrants are part of a series of restrictions that have been imposed on potential buyers of Northern Rock, the Sunday Times added. Most of the curbs relate to ensuring any rescue deal does not fall foul of EU rules on state aid.
In government guidance notes issued to bidders, they have been told the amount of retail deposits that could be accepted within the first three years may be capped, the paper reported.
Three bidders will tomorrow submit to the Treasury their rescue plans to save the bank, the Sunday Times said. The bidders are a consortium headed by Sir Richard Bransons Virgin Group; a bid from from private equity group Olivant; and a stand-alone solution that would see Paul Thompson, a former investment banker, put in as chief executive.
Nationalisation also remains an option that has not been ruled out.
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