Plans to sell Northern Rock 'will not work'

FRESH doubts have been cast on Northern Rock's future, with acting Liberal Democrat leader Vince Cable saying plans to sell the troubled bank "will not work".

The global credit crisis meant no bidder could raise the money needed to pay back the £25 billion in government loans made to the bank, he said in weekend TV interview.

Some analysts believe Northern Rock might decide as early as today whether to continue talks with prospective bidder Olivant, which is now seen as the chief rival to preferred bidder Sir Richard Branson's Virgin Group.

The Olivant consortium, headed by Luqman Arnold, the flamboyant former Abbey National chief executive, outlined details of its intentions for Northern Rock on Friday.

It plans to immediately repay £15bn of taxpayers' money used to prop up Northern Rock, reimbursing the remaining £10bn by 2009.

Cable said: "The amount of money being sunk in [Northern Rock] is absolutely staggering." He repeated his call for the government to take temporary control of the bank's affairs "to stabilise the situation".