The bank would aim at lending to small and medium-sized companies that are struggling to obtain finance. Well-respected analyst Sandy Chen of Panmure Gordon, is behind the venture and Sir Peter Burt, former chief executive of Bank of Scotland, is being lined up as the chairman.
Sir Richard Branson is also working on plans to get a full banking licence for his Virgin Money business, while Vernon Hill, an American banking entrepreneur, is raising capital for his Metro Bank venture, which wants to open 200 London branches.
The introduction of new competitors in the UK market is being encouraged by the UK government and the European Commission. Furthermore, The Federation of Small Businesses (FSB) has said that small companies are suffering because of a lack of competition in the banking sector and that more than three quarters of the firms were in the hands of Lloyds Banking Group and the Royal Bank of Scotland, which were both bailed out by the UK government. The FSB said smaller banks and the UK post office network should be encouraged to enter the small business market to create "effective competition".
The sale to a new entity or the revival of the Williams & Glyn's brand by current owner Royal Bank of Scotland would also respond to calls for competition. Lloyds has abandoned plans to close down Cheltenham and Gloucester so that the business can be put up for sale. EC officials have proposed that RBS and Lloyds should merge part of their businesses into a new entity.
