Citigroup to Help Northern Rock with Funds: Reports

U.S. investment bank Citigroup is planning to help keep Northern Rock independent by arranging a consortium of bidders to bail it out, or by directly offering it a loan, according to conflicting weekend newspaper reports.

Sources familiar with the matter told Reuters on Thursday that Citigroup had offered to provide funding to potential buyers of the British bank as part of its advisory role.

The Mail on Sunday said Citigroup is putting together a consortium of American banks and insurance groups to raise up to 20 billion pounds ($40.7 billion) to finance its mortgage book, and to help keep the bank independent.

That would free it from its current dependence on emergency loans from the Bank of England. However, the paper said if the cash is not used for that purpose, it could be offered to buyers to fund a takeover.

The paper added that reports of Citigroup offering billions of pounds were wide off the mark, quoting unnamed sources close to the situation.

However, The Sunday Times said Citigroup could lend up to 10 billion pounds directly to help Northern Rock survive. This followed a report in Thursday's Daily Telegraph which also gave that figure.

Northern Rock was not immediately available for comment, and neither was Citigroup.