New banks eye up building society subsidiaries

National Counties Building Society, based in Epsom, Surrey, owns the Hampshire Trust bank, and Manchester Building Society controls Whiteaway Laidlaw bank.

Both subsidiaries have full banking licences which make them very attractive acquisition targets for aspiring new entrants to the banking sector.

National Counties is currently in exclusive talks to sell Hampshire Trust to Walton & Co, the lender being set up by financial analyst Sandy Chen of Panmure Gordon.

Manchester Building Society is in talks with an unnamed bidder for Whiteaway Laidlaw. Potential bidders apparently include Sainsburys.

Virgin Money, which itself plans to relaunch into the savings and mortgage markets this year, set the trend when it bought Church House Trust, which had its own banking licence, in January. Virgin paid £12.3m for the bank.

National Counties and Manchester Building Societies (the 16th and 17th largest societies in the UK), are understood to be interested in selling their subsidiaries as demand has pushed up their value.

Successful sales of the two small subsidiaries could book each society a profit as a capital gain.