Sandy Chen, one of the City’s most respected banking analysts, is the latest financier to consider upping competition in the Square Mile by setting up his own bank.

Panmure Gordon analyst Chen is understood to be in conversations with potential investors for the bank, which has yet to be named, and could raise around £100m through a stock market listing.

He has also held talks with former Bank of Scotland chief Sir Peter Burt about chairing the venture.

But sources close to the stockbroker last night played down the idea that the launch of the new bank is imminent, saying that it is a “great concept, but a long, long way from being a reality”.

The bank would seek to raise deposits from wealthy clients by offering above-average interest rates, and would use the cash to lend money to medium-sized enterprises which are finding it hard to grow due to low availability of credit.

Chen, who has acted as an informal advisor to the Liberal Democrats during the financial crisis, recently quashed rumours that he was planning to run as a candidate for the party, saying that he couldn’t “afford the salary”.

Other financiers looking to enter the banking market – in which Alistair Darling has said he is committed to developing competition – are Sir Richard Branson’s Virgin Money and US entrepreneur Vernon Hill, who is planning a new operation called Metro Bank, which would have hundreds of branches in London.

Original article copyright Emma Keens - CityAM .com

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