Blackstone to launch a bank

A NEW retail bank to be backed by US private equity group Blackstone is set to go up against Virgin Money and analyst Sandy Chen’s Walton & Co bank later this year in the race to snap up the assets of Northern Rock, RBS and Lloyds Banking Group.

Blackstone has applied to the Financial Services Authority for a banking licence for its planned vehicle, a high street lender called The Home and Savings Bank.

The firm is understood to have already raised £200m of internal funding, alongside £50m from the Pears family, owners of property and investment firm The William Pears Group, and a smaller amount from fund manager Cambridge Place.

It has lined up former Abbey National chief Peter Birch to become chairman of the new bank, while ex-Tesco Personal Finance boss Stuart Sinclair will take an executive role.

The move pits Blackstone directly against its potential future rivals in the sector, particularly Virgin Money, led by Jayne-Anne Gadhia, which last week acquired small private bank Church House Trust to kick start its move into retail banking.

Walton & Co, the new bank set up by former Panmure Gordon analyst Sandy Chen, is also looking at Northern Rock and the assets put up for sale by Lloyds and RBS.

But insiders say future tie-ups between those in the sector cannot be ruled out. “There won’t be enough assets to go round so we can expect lots of clubbing together,” said one.