Yorkshire Building Society is ‘credible bidder’ in race for Rock

Chancellor George Osborne announced this week that the Government wants to sell the nationalised bank and said any interested parties could bid for it, including mutuals, “which this Government is actively committed to promoting”.

Iain Cornish, CEO of Yorkshire Building Society, welcomed the Chancellor’s comments and said Britain’s second biggest building society would look closely at Northern Rock.

The bank was nationalised in February 2008 after a run on its branches. It made a loss of £232m last year. Mr Cornish said Yorkshire could help reverse those losses by lending out more money through its group network of branches.

He said: “We would see ourselves as a credible bidder.

“We certainly would like to see Northern Rock back in the mutual sector.

“But we have not seen any detail and don’t know what the process would be and don’t know what the current state of Northern Rock is.”

Deutsche Bank is advising the government on the Northern Rock sale.

Yorkshire Building Society could fund the deal through excess capital, a fundraising or by instalment, said Mr Cornish.

He added: “Until we have done the sums it is quite hard to answer that question with any precision. I assume they will use their advisers to initiate a sales process.

“Once they do that, we will certainly register our initial interest and will want to look at the books and then we will take it from there.”

Yorkshire Building Society is set to complete its merger with Norwich & Peterborough later this year, which will give it 178 branches. Northern Rock has 74.

Other bidders could include National Australia Bank (NAB), the parent company of Yorkshire Bank, Virgin Money, Tesco, Coventry Building Society and JC Flowers, the US private equity firm.

A spokesman for NAB declined to comment yesterday. But chief executive Cameron Clyne has said NAB would look at options to grow by acquisition, although the group’s number one priority “is and has always been to grow the business organically” and any potential acquisition would be judged on whether it could generate value for the bank’s shareholders.

Deutsche Bank will prepare an information memorandum for interested parties over the next few weeks.