Virgin and NBNK considering partner for Lloyds branch bid

VIRGIN Money and NBNK Investments are considering bringing in a partner to bid for the 630 branches Lloyds Banking Group has up for auction, with Clydesdale Bank-owning National Australia Bank seen as the most likely candidate.

It is understood the preferred option for both Sir Richard Branson's company, which employs nearly 100 at its Edinburgh HQ, and NBNK remains standalone bids for the Lloyds portfolio to create a new challenger to Britain's big four banks.

But both groups are said to believe it is too early to rule out making a bid with a partner. Analysts said a link-up with NAB UK, which also owns Yorkshire Bank, would lower the amount of money either company would need to splash out, and, in NBNK's case, provide a ready made infrastructure that the consolidation vehicle lacks. NBNK, with former Northern Rock chief executive Gary Hoffman in charge, is essentially a cash shell with 50 million behind it.

One source close to the Lloyds auction and the sale of the nationalised Northern Rock said: "In terms of any potential joint bid for these assets you can see why many people think all roads lead to NAB UK. It is a rerun of the situation when Royal Bank of Scotland sold off a few hundred branches last year.

"Although Santander eventually won the auction, NAB was constantly linked with a rival offer, with or without partners, because of its public position that it believes it can be an agent for UK banking consolidation."

Virgin is seen as being less in need of the infrastructure Clydesdale and Yorkshire could provide because it believes its existing technology platform is already compatible with Lloyds.

NAB UK, Virgin and NBNK were unavailable for comment.