OneSavings Heeds Miliband Call In Float Push

Written By Unknown on Selasa, 21 Januari 2014 | 18.56

By Mark Kleinman, City Editor

A lender backed by a prominent Wall Street financier is stepping up plans for a stock market flotation that it hopes will help it to become a serious challenger to the main high street banks.

Sky News has learnt that OneSavings Bank, whose Kent Reliance and other trading brands have hundreds of thousands of customers, has hired Barclays, Royal Bank of Canada and Canaccord Genuity to work on the listing.

The flotation is expected to take place this year, and would offer at least a partial exit route for Christopher Flowers, the American tycoon whose investment vehicle helped to devise a rescue plan for the struggling Kent Reliance Building Society in 2010.

The appointment of the investment banks follows calls by the Labour leader, Ed Miliband, for greater competition in Britain's banking sector.

In a speech last week, Mr Miliband said that a Labour government would create two new challenger banks to the 'big five' by forcing established players to shrink their market share.

JC Flowers injected £50m of new capital into KRBS four years ago 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 prolific investors in financial institutions.

Insiders insisted that a flotation would not diminish that mutual ethos, echoing a vow made by the Co-operative Group as part of its ongoing £1.5bn restructuring.

In a statement issued to Sky News last month, 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."

the bank declined to comment on the appointment of advisers.

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, plans to float in 2016. Aldermore, a specialist lender to small and medium-sized companies, and Santander UK are also likely to pursue listings in the next two years.

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