Foreign banks 'could buy assets'

John Kingman says there can't be any restrictions on the nationality of ownership on any of the investments

Foreign banks will not be prevented from snapping up parts of the UK's part-nationalised lenders when they are sold off to boost competition in the UK market, MPs have been told.

Representatives from UK Financial Investments (UKFI) - which manages the Government's banking stakes - told the Treasury Select Committee they expected "healthy interest" in assets from Royal Bank of Scotland and Lloyds Banking Group and said foreign banks could be among the potential buyers.

The comments come in the wake of the announcement that the pair will shed more than 900 branches to ease European competition worries over the level of state support they have received.

UKFI chief executive John Kingman was asked if there would be any rules on whether or not bids could be made from overseas institutions.

"I envisage no restrictions on the nationality of ownership on any of our investments," he said.

The Treasury has said that only small or new players in the market will be allowed to buy the RBS and Lloyds assets, which together account for around 10% of UK retail banking.

The Financial Services Secretary Lord Myners, who also appeared before the committee, put his support behind the European competition commissioner behind the asset sale agreements.

He said Neelie Kroes had done a "remarkably good job" in her work across Europe.

"We have built on her work in ensuring we have gone further in ensuring competition," he said.

Mr Kingman said the four-year time period for the sale meant the banks were "not facing the danger of having to make fire sales".