Northern Rock gets more approaches

By Steve Slater and Eleanor Wason

LONDON (Reuters) - Stricken British bank Northern Rock NRK.L has received more rescue proposals, but warned that one of them contemplated an offer well below Tuesday's closing price, wiping another 12 percent off its value on Wednesday.

The auction of Northern Rock was slammed by one of its major shareholders, hedge fund RAB Capital, which said the bank should not be broken up, but should be continued as a going concern.

Northern Rock declined to disclose the number or names of its suitors.

U.S. buyout firm JC Flowers has made what is believed to be the only offer for all of Northern Rock, but it only includes a "nominal value" for shareholders, a person familiar with the matter told Reuters on Tuesday.

Another person said rival buyout firm Cerberus had made a proposal, and a consortium led by Richard Branson's Virgin Group VA.UL and Olivant, an investment group led by veteran troubleshooter Luqman Arnold, said they have submitted offers.

Northern Rock said that one of the offers on the table was for all the company but at "materially below" its price at Tuesday's close.

"The company's advisors have begun discussions with a number of selected interested parties to clarify their proposals," it added in a statement.

Northern Rock shares fell 12.6 percent to 84.8 pence, as dealers said it appears increasingly likely shareholders will not get much for their holdings.

It was the seventh successive daily fall and cut the bank's value to 360 million pounds ($741 million), down almost 90 percent since the start of September.

MORE BIDDERS?

Philip Richards, chief executive of RAB Capital, which built up a stake of more than 6 percent in Northern Rock in September, said he was confident some shareholder value can be salvaged, but criticized the auction process.

"What the government should be doing having caused a huge mess is working with the company. There are other stronger management teams putting themselves forward. It shouldn't be broken up, it should continue as a going concern," he said.

Richards said he expected other bidders who have not yet been identified to emerge.

Northern Rock had also been hurt by the Bank of England's lending policy during the crisis, Richards said, in contrast with the U.S. Federal Reserve or the European Central Bank.

"People are borrowing left, right and centre elsewhere. It's only in the UK that a bank gets named and shamed and destroyed in the process," he said.