Battle of the banks
SOME OF the City’s most powerful names are gearing up for an almighty bidding battle over state-controlled banking assets including Northern Rock and parts of Lloyds Banking Group.
Lloyd’s of London chairman Lord Levene and City grandee Sir David Walker will take on Richard Branson’s Virgin money in a fight to create a new nationwide high street banking giant.
The high-profile pair are set to list a new vehicle on the Alternative Investment Market in as little as three weeks’ time, with a view to acquiring some or all of the state asset pile after the IPO.
Sources close to Virgin Money yesterday said the firm would still be “very much in the hunt” for the assets despite the emergence of a fresh contender. But tensions between the rivals will be heightened by the revelation that Virgin’s former chairman, the late Sir Brian Pitman, had also played a key role in the setting up of Levene and Walker’s venture.
City A.M. can reveal that Pitman, a former Lloyds Bank chief executive, was a senior consultant to the project prior to joining Virgin, with those at the heart of the discussions confirming that he had been instrumental in “reviewing and validating the business plan”.
A Virgin Money spokesman played down talk of a conflict of interest between the ventures, but he confirmed that the firm had been aware Pitman was involved in other projects at the time of his appointment.
“It makes absolute sense that someone of Sir Brian’s experience and stature would be consulted on a project like this,” he said. “But ultimately he decided that Jayne-Anne [Gadhia, Virgin Money’s chief executive], our management team and business model were something he wanted to be a part of.”
Though they aim to raise just £50m at IPO, Levene and Walker have already been able to
use their influence to secure £2bn of funding from a group of 10-12 major City institutions, including Aviva Investors, F&C Asset Management and Invesco.
Levene will take up the chairmanship of the new bank, while Walker will be a non-executive director. A raft of other respected City figures have also agreed to join the board. Levene is said to have been “extremely active” in the past three to four weeks in pursuing potential deals. But though talk in the City yesterday was that the new bank’s top team had not yet managed to secure meetings with either Northern Rock or Lloyds, a spokesman for the venture insisted the “calibre of the team and personalities mean there will be no problem with taking them seriously”.
Levene and Walker are expected to explore bids for a host of retail bank assets.
Investment bank Cenkos and boutique advisory firm Kinmont are both advising on the project. After the Aim listing, Cenkos will act as nominated adviser (Nomad) to the as yet-unnamed firm, while Kinmont will be its broker.