CITY of London grandees could swoop for Northern Rock as a Treasury Minister yesterday declared it was a “platform” for new entrants to the banking sector.
Lord Levene, chairman of the Lloyd's of London insurance market, and international banker Sir David Walker are backing a new venture looking at bidding for the Rock and other taxpayer-backed bank assets.
Details of a bid for the Newcastle-based Rock could become public within days, with thousands of North East workers directly and indirectly affected by any developments.
UK Financial Investments, which oversees Government-owned banking assets, and the City regulator have already been briefed.
The news came as The Journal spoke to Treasury Minister Mark Hoban, who has responsibility for financial services, about the future of Northern Rock.
The Financial Secretary to the Treasury said: “I have certainly spoken to Lord Levene, but I have made it very clear that it is down to UKFI to manage this process.”
And while declining to discuss the details of that conversation, he stressed the coalition was committed to increased competition and diversity.
While not completely dashing hopes of the Rock becoming a mutual society, again, he indicated that the best return for taxpayers was the key objective.
That may be an indication that a sale to the private sector is more likely, particularly given the Liberal Conservative Government's goal of cutting the national deficit.
He said: “This is very much a matter for UKFI. It is their responsibility to manage our state-owned assets, obviously including Northern Rock. What they have also got to do is protect taxpayers' interests in this as well.
“But of course one of the things that UKFI have done is to divide that into ‘good bank-bad bank’ as it were.
"And of course the good bank does provide a platform for someone who wants to enter the UK banking market.”
Sources yesterday confirmed Lord Levene and Sir David Walker plan to list a special company on the stock market and have already got investment banks and advisers on board.
The company is also understood to be looking at parts of Lloyds Banking Group and Royal Bank of Scotland, which are being put up for sale in return for state bail-out money received during the financial crisis. The project aims to create a new banking player to rival the established groups. Institutional investors including Aviva, Invesco and F&C Asset Management are already said to have pledged billions of pounds to the deal in principle.
Lord Levene has been lined up as chairman of the banking proposition with his minimum three-year term at Lloyd's ending later this year.
He has had a highly regarded career in the private and public sector, including a stint as Lord Mayor of London and as a former adviser to the Chancellor.
Sir David is expected to become a non-executive director. He is an ex-Bank of England director and former deputy chairman for the then Lloyds Bank.
Most recently, he was called upon by the Government to come up with a new code of best practice for bankers.
But Sir Richard Branson's Virgin Money is widely seen as a strong rival contender to buy up state-owned banks, with other names also in the frame.