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Deadline for Northern Rock bids today

Virgin, Olivant and Northern Rock’s management are expected to submit formal bids for the collapsed bank to meet today’s deadline.

Northern Rock borrowed £25bn from the Bank of England last year after its reliance on the wholesale money markets put it into financial difficulties when the credit crunch hit.

With a private buyer, the Government wants to turn the £25bn into bonds which would be sold to investors.

But Liberal Democrat shadow chancellor Vince Cable has stressed that the Government should not allow its desire for a speedy private sale to override the high risk to taxpayers.

He says: “The chancellor must ensure that any successful bid gets the best deal for the taxpayer. Taxpayers now face years of supporting Northern Rock, while any new private owner makes an absolute killing.

“It is essential that ministers are not given the weakest of Northern Rock’s assets as security, such as the £8bn of unsecured loans, and that the Treasury has full recourse against the bank. New private buyers must assume legal responsibility for all of the obligations of the bank, specifically taxpayers’ loans and guarantees.”

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