LONDON (Dow Jones)-Virgin Money is in pole position to buy Northern Rock ahead of the final bid deadline this week, people familiar with the situation said Monday.
Virgin is expected to submit a bid of around $1.6 billion, which equates with $2.2 billion injected into the U.K. lender when it was nationalized in February 2008, discounted by the shrinkage in the size of the business.
Virgin's bid is backed by U.S. buyout firm Carlyle Group, U.S. investor Wilbur Ross, the U.K.'s Universities Superannuation Scheme as well as funding from the Middle East.
The only other bid on the table is likely to come from NBNK Investments PLC, the bank acquisition vehicle which has also submitted a bid for the retail branch network being sold by Lloyds Banking Group PLC. NBNK will only pursue a bid if it is successful in the Lloyds auction.
The only other potential buyer of the business is JC Flowers, but the U.S. private equity firm is no longer pursuing a bid after talks with Principality Building Society, with a view to submitting a joint bid, collapsed last week.
Deutsche Bank AG is running the Northern Rock auction for U.K. Financial Investments Ltd., the government body that manages the state holding. Following its nationalization, Northern Rock was split in two with a "bad bank" holding the bulk of the original Northern Rock's mortgage portfolio, Northern Rock PLC now consists of $27.1 billion in retail deposits, a $19.9 billion mortgage book and 75 branches.
