Ex-Rock boss ‘keen to join in bidding for old bank’

The move raises the possibility that NBNK could combine Northern Rock with around 630 Lloyds bank branches it is also eying to create a powerful new competitor to Britain’s established banks.

NBNK, set up last year by Peter Levene, chairman of the Lloyd’s of London insurance market, is headed by chief executive Gary Hoffman, who was boss at Northern Rock until last November.

As part of his exit terms, he was barred from making a bid for Northern Rock until next month.

The sources said Mr Hoffman had asked Northern Rock and UK Financial Investments (UKFI), which oversees Britain’s state-owned banking assets, for the ban to be lifted early so he could make a bid, and both parties had agreed.

“It’s in the interests of the taxpayer to have as many potential bidders for Northern Rock as possible,” one of the sources told the news agency Reuters.

Northern Rock was Britain’s first major bank casualty of the credit crunch and was fully nationalised three years ago.

After its near-collapse, it was split into a “good bank” comprising new mortgages and savings, and a “bad bank” holding its toxic assets.

It is the “good bank” that is being sold.

Two sources with knowledge of the matter previously told Reuters that Virgin Money had submitted an expression of interest, while analysts have said private equity firm JC Flowers might also make a bid.

The Mail on Sunday said updated bids were due by October 31.

NBNK confirmed last month it had submitted a second- round bid for the Lloyds bank branches.

According to a statement on its website, NBNK “aims to introduce vital competition into the market – and create a better deal for customers, many of whom are disillusioned with the way they are treated by other banks”.

Last night, a Northern Rock spokesman told the Yorkshire Post: “We’re continuing to explore the sale of Northern Rock in the interests of the taxpayer.

“We aren’t commenting on the specifics of individual parties.”

UKFI declined to comment. NBNK could not immediately be reached for comment.