Financial News

  • 10 December 2013, 10:27

Ex-Mutual OneSavings Eyes Stock Market Float

A British bank backed by one of Wall Street's most prominent financiers is preparing for a stock market flotation that would augment a glut of high street lenders planning to go public.

Sky News has learnt that OneSavings Bank, whose Kent Reliance and other trading brands have hundreds of thousands of customers, has begun talks with investment banks about a listing during 2014.

A public offering of shares could offer an exit route for Christopher Flowers, the American tycoon whose JC Flowers investment vehicle helped to devise a rescue plan for the struggling Kent Reliance Building Society in 2010.

JC Flowers injected 50m of new capital in exchange for roughly 40% of OneSavings, which describes itself as part of a "unique mutual hybrid arrangement", under which the bank is a subsidiary of an industrial and provident society called the Kent Reliance Provident Society (KRPS).

The restructuring was designed to allay members' fears about the loss of its mutual ethos when it agreed the deal with JC Flowers, one of Wall Street's most prominent investors in financial institutions.

By listing its shares, OneSavings would be pursuing a similar route for raising future capital as that being adopted by the Co-operative Bank, which has been forced to fill a 1.5bn capital hole by the banking regulator. The Co-op has pledged to enshrine ethical principles in its constitution as part of its recapitalisation.

In a statement issued to Sky News, a spokeswoman for OneSavings Bank said: "I can confirm that OneSavings Bank is reviewing various options to continue to build the business for the long term benefit of all its stakeholders whilst maintaining the bank's mutual ethos - to make any further comment would be premature."

If it does float, it would herald a return to the stock market in the banking sector for Sir Callum McCarthy, the former boss of the Financial Services Authority, who is among OneSavings' non-executive directors. Stephan Wilcke, the bank's chairman, was one of the architects of the improved deal won by the Co-op Bank's private investors last month.

Since injecting funds into Kent Reliance in 2010, JC Flowers has sought to acquire other lenders in order to create a much larger organisation. However, it has been thwarted in its efforts to buy the Principality Building Society and more than 300 branches being offloaded by Royal Bank of Scotland (RBS).

It did succeed earlier this year in snapping up a package of performing loans from Northern Rock Asset Management, the taxpayer-owned "bad bank", which added 70,000 customers to its ranks.

OneSavings discloses some information about its financial performance because it has subordinated debt instruments which trade on the London Stock Exchange.

In August, it announced that it made a post-tax profit of 12.4m during the first half of the year, against a post-tax loss of 1.8m during the same period a year earlier.

There is an unprecedented pipeline of British banks waiting to list their shares publicly, including branch networks being sold under European state aid rules by both RBS and Lloyds Banking Group.

Metro Bank, which is raising 385m to fund its expansion, has said it may float in 2016. Aldermore, a specialist lender to small and medium-sized companies, and Santander UK are also likely to pursue listings at some stage.