NATIONALISED lender Northern Rock took its first step in returning to the private sector as the Government announced plans to hire financial advisors ahead of a possible sale.

City analysts expect a price tag of £1.4bn to be a starting point for any bids, with a stock market flotation also believed to be under consideration.

Northern Rock was bailed out in February 2008 after running aground during the credit crisis following its strategy of borrowing short-term funds from wholesale markets to lend to mortgage borrowers.

Uncertainty about its future sparked the first run on a UK bank for 150 years.

The Newcastle-based lender was brought into public hands nearly three years ago after the Government shunned takeover bids from suitors, which included a group of Northern Rock directors, and Sir Richard Branson’s Virgin Money. Analysts are tipping Virgin Money as a frontrunner to take control of the group.

The Government may also find itself under pressure to relax conditions placed on the former chief executive of Northern Rock, Gary Hoffman, which bar him from bidding for the lender until November this year.

Last year, Mr Hoffman left Northern Rock to join NBNK Investments Plc, which aims to build a bank through acquisitions.

UK Financial Investments (UKFI), the body charged with overseeing the Government’s banking assets which include 83 per cent of Royal Bank of Scotland Group Plc and 41 per cent of Lloyds Banking Group Plc, launched a tender for corporate finance advisors to look at options for Northern Rock. Corporate finance advisors have until Monday to express their interest in the contract work.

At the start of last year, the lender separated into the so-called “good bank”, a savings and mortgage business called Northern Rock plc, and Northern Rock Asset Management to include its toxic loans.

It is the “good bank” which is being prepared for a possible return to private ownership.

“An advisor will be appointed to work with UKFI and Northern Rock to evaluate strategic options for the company,” a UKFI spokesman said.

“There is no presumption at this stage that any particular option will be pursued and no timeframe has yet been set for the return of the company to private ownership.”

It’s not expected that any deal will be agreed until the second quarter of this year.