Coventry BS throws hat into ring to buy NRock

Coventry Building Society has flagged its willingness to buy the so-called "good-bank" Northern Rock and remutualise the state-owned lender after its bail out and nationalisation in February 2008.

A campaign to remutualise the lender has been underway for some time, according to The Guardian, but Coventry is the first buyer to throw its hat into the ring for the bank.

A Coventry spokesperson said: "The Government and UK Financial Investments Ltd have yet to confirm the process and timetable for the sale of Northern Rock. When that decision is made the Board will examine the criteria laid down and decide the next steps to take.

"At this stage we cannot rule anything out but emphasise that whatever decision is made will be in the best interests of the Society's members."

Deutsche Bank was appointed last month as adviser to Northern Rock and UKFI, the caretaker of the UK taxpayer's stake in the bailed out banks, signalling the government's interest in offloading Northern Rock.

Northern Rock was a building society until 1997, but remutualisation is viewed as highly unlikely by City analysts, as it could result in lower returns on sale.

The Northern Rock that was nationalized three years ago has been restructured into Northern Rock plc - the "good" bank that has resumed lending - and Northern Rock Asset Management, the "bad" bank that has been merged with Bradford & Bingley's mortgage business to create UK Asset Resolution.

UKAR published its first annual report figures yesterday, which showed a quarter of the mortgages it inherited from Northern Rock's "bad bank" were in negative equity.

B&B and NRAM returned to profit last year. Combined, they made pre-tax profits of £1.48bn against a £454m loss in 2009.