LONDON (Reuters) – U.S. private equity company Blackstone (BX.N) has applied for a British banking licence, a source familiar with the matter said, making it the latest major player looking to capitalise on a sector in disarray.
Blackstone, one of the world’s leading buyout firms, is working alongside fund manager Cambridge Place, the source said.
“The rationale is that with the banking industry under pressure in the UK, there is a window for a very traditional banking model focused on savings and mortgages,” the source told Reuters on Wednesday.
A shake-up of the British banking sector — not least due to a forced sell-off of over 900 high street branches by bailed-out lenders and government support for increased competition — has attracted dozens of potential bidders and new entrants, seeking to capitalise on what is seen as a window of opportunity.
Earlier this month, British businessman Richard Branson’s Virgin Money moved into retail banking by spending 50 million pounds ($82 million) on a tiny provincial bank with the licence needed to sell savings and mortgage products. [ID:nLDE607090]
While Blackstone acted as an advisor to nationalised Northern Rock in 2007, few private equity firms have ventured into the traditional banking sector due to the scale of investment needed.
Only British private equity firm Anacap has moved into the space, establishing mortgage lender and savings bank Aldermore, by merging Ruffler Bank with Base Commercial Mortgages.
Any move by Blackstone toward establishing a high street banking presence would signal a marked change in the kind of deals the buyout group is prepared to pursue.
The source said it was not yet clear, however, whether the proposed banking venture would come to fruition.
Blackstone and the Financial Services Authority declined to comment. The FSA typically takes up to 12 months to approve a banking licence application. Cambridge Place were not immediately available for comment.
(Reporting by Simon Meads; Additional reporting by Clara Ferreira Marques; Editing by Dan Lalor) ($1 = 0.6126 pound)