Northern Rock is poised to name a consortium led by Richard Branson's Virgin Group as favourite to buy the bank, the BBC has learned.
BBC business editor Robert Peston has discovered that the bank wants to name the group its preferred bidder.
If formal approval is given by the Treasury, an announcement could be made as soon as Monday, Mr Peston says.
If the bank's shareholders resist the deal, he said the bank would most likely be put into administration.
"Right to the last, the Treasury has been considering US to freeze Tamil charity assets ...
US 'to target Iranian elite unit' ...
Northern Rock dividend cancelled ...
Northern Rock deposits guaranteed ...
Northern Rock asks for Bank help ... a radical alternative, which was to nationalise the bank," Mr Peston said.
"But it appears to have decided that taxpayers' interests are more likely to be protected by a private-sector solution."
Of the 10 expressions of interest from financial institutions in taking control of Northern Rock, Virgin's was preferable because it offered the best deal to the stricken lender's shareholders, Mr Peston said.
But if investors, which include hedge funds RAB Capital and SRM Global, are unhappy with the terms offered and resist the deal, he warns that the company and the government are likely to make it clear that the alternative would be to put the bank into administration under insolvency procedures.
"If the Rock went into administration, shareholders might end up with nothing," he said.
(BBC)
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