Leading Australia bank 'looking into bid for Northern Rock'

The company – which owns Clydesdale and Yorkshire banks in the UK – has held a “beauty parade” of potential investment banking advisers to assist it in an auction of the Newcastle-based lender, according to reports.

NAB has hosted presentations from the likes of Lazard, Citigroup, CSFB and Morgan Stanley, it has been stated.

The Australian bank is looking to become a major player as Northern Rock is returned to the private sector and Royal Bank of Scotland and Lloyds Banking Group are forced to sell off hundreds of branches in a shake-up of the UK banking industry.

At the beginning of the year, Northern Rock was split into a “good bank” with about 19bn in savings and 10bn of mortgages, and a “bad bank” – Northern Rock Asset Management – which has been left with the majority of the lender’s loan book.

NAB, which was unavailable for comment, is one of Australia’s largest banks with 8.3 million customers in 10 countries.

But its assault on the UK market is likely to face heavy competition for banking assets from supermarket Tesco, while Sir Richard Branson’s Virgin Money came close to buying Northern Rock before it was nationalised in February 2008.

Northern Rock was the first banking victim of the credit crunch as frozen money markets exposed its high-risk business model.

The former building society was once the UK’s fifth-biggest mortgage lender but was at the centre of the country’s first bank run for more than 140 years in September 2007.