Citigroup poised to bail out Northern Rock: reports

Chief Regulatory Officer at CSE Renuke Wijayawardhane presenting the listing certificate to Executive Chairperson at Renuka Hotels Shibani Thambiayah

LONDON, Oct 7, 2007 (AFP) – US financial giant Citigroup Inc. is set to hand troubled British bank Northern Rock a multi-billion pound lifeline to ease its current funding crisis, three newspapers here said Sunday.

The Sunday Times and The Sunday Telegraph said Citigroup was prepared to lend Northern Rock between five billion pounds and 10 billion pounds (7.2 billion-14.4 billion euros, 10.2 billion-20.4 billion dollars).

The Mail on Sunday said the figure could be up to 20 billion pounds using financing from US banks and insurance groups.

Northern Rock, Britain’s fifth-biggest mortgage lender, is currently the subject of takeover talk after being forced to ask the central Bank of England for an emergency loan of a rumoured 10.9 billion pounds last month.

The news sparked the first “run” on a British bank in living memory as anxious savers rushed to withdraw their cash from Northern Rock branches.

Without citing sources, the British newspapers said Sunday the exact terms of the deal with Citigroup were still being hammered out in consultation with the government and a decision was expected this week.

Funding would allow Northern Rock to stop borrowing at the Bank of England’s punitive