US private equity firm eyes UK banking sector

Kent Reliance Building Society: interest from JC Flowers
Kent Reliance Building Society: interest from JC Flowers

US private equity business JC Flowers is set to enter the UK financial services market through a joint venture with Kent Reliance Building Society.

JC Flowers has confirmed it is in talks to invest £50m in a new "vehicle", of which Kent Reliance Building Society would hold a 51% stake, therefore retaining its mutual status.

A statement from Kent Reliance said: "If the new structure proceeds, it would allow for substantial new capital investment to support the business, and would provide a means for the society’s members to remain members of a mutual organisation."

The 150-year old building society has approximately 180,000 customers, and in 2009, registered a £2.26m pre-tax profit.

Private equity firm JC Flowers had previously attempted to enter the UK banking sector with a bid for Northern Rock in 2007, prior to the bank’s nationalisation under the previous Labour government. In 2008, it also made a bid to acquire Friends Provident.

Separately, a group of senior UK financial services executives including Lord Levene, chairman at insurer Lloyd’s of London, and government adviser Sir David Walker, have established a venture named ‘Project New Bank’, with the aim of buying some of the Northern Rock, Lloyds Banking Group, and Royal Bank of Scotland bank branches being sold by the government.

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