Northern Rock upbeat after moving into the black
AN expanded Northern Rock could play an important role in shaking up the troubled banking sector, its chief executive said yesterday.
Gary Hoffman said Northern Rock Plc – the so-called “good bank” part of the business which was divided in two at the start of the year – has “all that is needed” to grow into a substantial player in the industry.
But he said that the nationalised lender is currently too small to provide meaningful competition to the handful of dominant players in a sector ministers have said needs shaking up to provide more competition.
The Government has yet to decide the fate of the Rock which is being prepared for a sale to the private sector.
One option believed to be at an early stage of consideration is to grow the business before it is sold off, perhaps involving a tie-up with some of the 600 branches put up for sale by its much larger rival Lloyds.
Such a move – although highly complex and certainly not imminent – would enhance competition in a sector which has come under fire this week from Chancellor George Osborne for its failure to lend money to businesses.
“I do think that Northern Rock has an important role to play in the financial services landscape,” Mr Hoffman told The Journal yesterday.
“As we all know, given the problems the sector has had after the disappearance of HBOS, Bradford & Bingley, Alliance and Leicester along with foreign competitors, the market is over-consolidated and there must be space for Northern Rock to play an important part in the future.
“That could be either as an individual, grown business or, more likely, at the heart of a bigger entity.”