Northern Rock's return to the private sector was kick-started yesterday as UK Financial Investments, the body that represents taxpayers' interests in the banking sector, invited bankers to pitch for a mandate to work on "strategic options".
While UKFI has insisted that everything is on the table for the bank, which had to be nationalised to stave off collapse as its sources of funding dried up in the midst of the financial crisis, that is likely to mean an auction process later this year.
The work is expected to be keenly contested, although the final decision could prove highly controversial, not least if the choice were a bank which has attracted public criticism such as Goldman Sachs.
The key figures involved in the decision will be the UKFI's chief executive, Robin Budenberg, a former banker with UBS, together with Keith Morgan, a former banker with Santander who looks after the state's fully owned banks, and Northern Rock's executive chairman, Ron Sandler.
A sale is not expected to be complicated by the Independent Commission on Banking. Its inquiry into the future of banking in Britain, at the behest of the Government, has effectively prevented any disposal of the state's shares in Lloyds or Royal Bank of Scotland, largely because investors cannot be sure about the shape of those institutions after the commission has reported.
However, Northern Rock is much smaller and neither RBS nor Lloyds can bid. The other two members of Britain's "big four" banks, Barclays and HSBC, are not thought to have much interest in a bank which may be a target for "new" entrants such as Virgin Money or possibly a private equity bidder.
NBNK, the new "narrow banking" group set up by Lloyd's of London chairman Lord Levene is barred for bidding after poaching Northern Rock's chief executive, Gary Hoffman, to be its CEO until November 2011.Reuse content