UK & World News
Start-Up Bank Abandons Stock Market Ambitions
George Osborne faces a fresh blow to his efforts to cultivate new competition in Britain's banking sector as one of the prospective new entrants abandons plans to raise funds through a stock market listing.
Sky News has learnt that Home & Savings Bank, which is being set up by a group of well-known industry executives, has gone back to the drawing board in its efforts to secure the financial backing required to compete with high street lenders such as NatWest. I last reported on Home & Savings Bank's ambitions to break into the UK market last November, when Citi was appointed to help prepare a flotation that would have raised up to £250m. I now understand from people close to the situation that Home & Savings is no longer working with Citi and is instead pinning its hopes on last-ditch discussions with a handful of unidentified private investors. The Chancellor's White Paper on banking reform, published earlier this month, reiterated the Coalition's determination to spawn a new wave of high street banks, but to date that ambition remains largely unfulfilled (a dozen Metro Bank branches excepted). The crisis that has engulfed the taxpayer-backed Royal Bank of Scotland in recent days does, though, illustrate the opportunity for new entrants who are not saddled by creaking IT systems to wade into the market. Home & Savings, which is backed by the hedge fund manager Cambridge Place and had hoped to secure funding from Blackstone, the private equity firm, has been planning to launch an internet and telephone-based banking service. Its founders include Peter Birch, former boss of Abbey National, and Stuart Sinclair, a former Tesco Personal Finance executive. A new seven-day account switching system, which the Government wants in force by the end of next year, should make it much easier for customers to move accounts. If there is a silver lining from the current crisis at RBS for its chief executive, Stephen Hester, it is probably that that system is not already in place. A Home & Savings spokesman declined to comment.