A group of the UK’s best-known City grandees took a step closer to creating their own 600-branch banking network yesterday, raising £50 million through a stock market listing.

NBNK Investments – launched by Lloyd’s of London chairman Lord Levene and former City regulator Sir David Walker – plans to use the money to buy branches from existing banks, and hopes to make its first acquisition within 18 months.

The company is understood to be eyeing the 600 branches that Lloyds Banking Group is being forced to sell for receiving state aid – including Lloyds TSB branches in Scotland – as well as parts of nationalised bank Northern Rock.

It aims to build a network of between 400 and 600 branches across the UK, accounting for between 4 per cent and 6 per cent of the market.

NBNK – whose institutional backers include Aviva, F&C and Invesco – will initially focus on retail banking and banking services for small and medium sized companies, while it also plans to expand into wealth management over time.

It will not be active in areas such as wholesale, international or investment banking. Instead, it says it will focus on offering traditional, branch-based banking services, in which individual managers are able to make decisions. It plans to offer a full range of products, and internet and telephone banking services.

Lord John McFall, the former Labour chairman of the Treasury select committee and recently retired MP for West Dunbartonshire, will sit on the board, alongside former Tory Scottish secretary Lord Forsyth.

Charles McCreevy, Ireland’s former European Union commissioner, and barrister Lord Brennan are also directors.

Levene, NBNK’s chairman, said: “The investment community, the public and the regulators have welcomed the potential for an institution such as the one we propose.

“Admission (to the stock exchange] marks the completion of the first stage in our plans. We will now establish a dialogue with a number of sellers of assets which would fit our acquisition profile.”

Levene is due to leave Lloyd’s of London in December 2011. A spokesman said NBNK had agreed to reimburse Lloyd’s for any time Levene spent on bank business between and now and next year.

Until he leaves, Levene will not be paid a salary from NBNK but will instead receive 200,000 shares.

NBNK has not yet chosen a name for its bank. The investment company’s name represents an abbreviation of ‘New Bank’, but a company cannot use the word bank in its name if it does not have a banking licence.

NBNK Investments placed 50 million shares yesterday at 100p each.  The stock closed up 6.5p last night at 106.5p.

It is the latest in a string of groups to announce plans to launch a high street banking operation in the UK.

Earlier this year, Virgin Money acquired a banking licence through the acquisition of small regional private bank Church House Trust.

Metro Bank, backed by US billionaire Vernon Hill, opened its first branch in London last month.

The new banks are also likely to face competition from Tesco Bank, the financial services arm of the supermarket giant.

Original article by Peter Ranscombe. Republished with kind permission from Scotsman.com

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