NBNK Investments gets £50m listing to buy high street banks

Banking venture NBNK Investments, which plans to open 600 branches across Britain, secured a £50 million boost through a stock market listing today.

It has listed on the AIM market, placing 50 million shares at 100p each. NBNK plans to use the money to buy up branches and hopes to make its first acquisition within the next 18 months.

The venture is being launched by City heavyweights including Lloyd's of London chairman Lord Levene and Sir David Walker, who recently carried out a review of corporate governance in Britain's banking industry. Lord McFall, former chairman of the Treasury Select Committee, will also sit on the board of directors.

NBNK has not yet chosen a name for its bank, although the investment company's name stands for New Bank, as a company is not allowed to have the word bank in its name if it does not have a banking licence.

The group is understood to be eyeing the 600 branches Lloyds Banking Group is being forced to sell, as well as parts of nationalised bank Northern Rock.

It aims to build up a network of between 400 and 600 branches across the UK, accounting for between 4% and 6% of the market.

NBNK will initially focus on retail banking and services for small and medium-sized companies but it plans to expand into wealth management.

It will not be active in areas such as wholesale, international or investment banking. Instead, it says it will focus on offering traditional, branch-based banking services, in which managers are able to make decisions.

The group said the size of the major banks' branch networks had declined by 43% since their peak in the late Eighties, and it hopes to capitalise on customers' desire for a more personal service.

It also believes it will have an advantage over established players as it does not have a legacy from the problems caused by the credit crunch.

Several companies have announced plans to set up a high street banking operation. Virgin Money acquired a banking licence this year through the acquisition of small regional private bank Church House Trust, and Metro Bank, backed by US billionaire Vernon Hill, opened its first branch in London last month.

The new banks are also likely to face competition from supermarket giant Tesco.