Church of England takes stake in new 'challenger bank' to take on the big five on the high street

The new bank will take on the big five on the high street, the government hopes. Photo: Press Association

We’re beginning to get a an idea of the shape of a new bank to take to the high street.

No, not TSB, recently spun off from Lloyds, but Williams & Glyn’s, another old brand (last seen three decades ago) which will be applied to 314 branches being hived off from RBS. Like Lloyds, RBS is being forced to sell off the business in return for the government bailout it received in the crisis.

This will be a “challenger bank,” expected to take on the big five established banks in the UK – that at least is the Government’s hope. A Treasury spokesman told me: “This is an important step in giving choice and competition in banking to customers, ” adding it would help make the financial system stronger.

The new bank is being bought by a consortium led by the private equity firm Corsair – including the Church of England’s investment fund.

This is a bank which promises to be ethical and after the Archbishop of Canterbury stepped in to the payday lender controversy, criticising Wonga, in particular, the Church now has a foothold in the market.

In return for £600 million, the consortium will get up to 49% of the bank with its 314 branches serving 2 million customers and almost a quarter of a million small and medium sized businesses.

Corsair has beaten off two other competing bids and I understand its success is at least in part because of the management Corsair will put in place – some heavy-hitters from business including the former head of small business lending at Lloyds, John Maltby, and the former chief executive and chairman of Standard Chartered, Lord (Mervyn) Davies.