SECURING Northern Rock could play a key role in making NBNK Investments, led by the North-East lender's former chief executive Gary Hoffman, instantly competitive on the high street.

It emerged in recent days that having seemingly ruled itself out of bidding for Northern Rock in June NBNK, co-founded by Lord Levene, was increasingly likely to enter the fray.

NBNK, which started trading in August last year, had been concentrating on number one target the Verde business, the assets Lloyds Banking Group must relinquish under the agreement which saw it given state aid, to give it the best chance of competing head on with the major high street banks.

To be competitive with the other banks any new entrant would need to secure around six per cent of UK personal and current account customers, previously making Northern Rock, with 74 branches, too small for its plans.

The Verde business, with 632 branches, offers a ready made 4.6per cent and NBNK's share could climb quickly by tempting those customers disillusioned with traditional banks to its fresh offering.

However it is understood that with NBNK confirming less than three weeks ago it had submitted a bid for Verde, thought to be in the region of £1.5bn, it is now keen to look at other businesses it could bolt onto that should it win, helping to grow its market share more rapidly.

Northern Rock would fit that bill, with Mr Hoffman known to have the highest regard for how the business is run and the attitude and skills of its employees as well as its back office set-up, explaining the renewed interest.

Last night neither NBNK or Northern Rock would comment on the speculation, which would see the former pitched against Virgin Money and JC Flowers.

But it is believed that, despite a deadline for indicative offers passing in July, NBNK has been given approval by UK Financial Investments, (UKFI) the organisation which oversees the Government's banking assets, and the Northern Rock board to bid after making an official request to enter the process.

If that it is the case it would seem that an agreement made when Mr Hoffman left the bank last year to lead NBNK that it cannot make a bid until November 1, has effectively been waived a couple of weeks early.

The Verde business includes the TSB brand, the Cheltenham and Gloucester business, Lloyds TSB Scotland and more than 250 Lloyds TSB branches throughout England and Wales.

Chancellor George Osborne used his annual Mansion House speech in June to announce the Government intends to sell Northern Rock, nationalised more than three years ago, back to the private sector.

The Government divided Northern Rock last year, forming a mortgage and savings bank called Northern Rock PLC and Northern Rock Asset Management to house the riskier loans.

It is the former half which the Government is preparing to return to private ownership.