THE Chancellor will this week outline plans to sell nationalised lender Northern Rock to a player with little presence in the mortgage market under plans to revive competition in the banking sector, it was reported today.

Alistair Darling's White Paper on banks and regulation reform - expected on Wednesday - will reveal that the Treasury aims to reignite rivalry between banks after the financial crisis lessened competition through the consolidation and collapse of major players, according to the Financial Times.

Many deals - such as Lloyds rescue takeover of HBOS - were waved through as financial stability became the overriding concern.

And it is understood that Mr Darling now wants to see new players emerge, using Northern Rock's sale as a way to bring on board an entrant looking to gain market share and a high street foothold.

This week is also expected to see UK Financial Investments (UKFI) - the body charged with managing Government-owned stakes in banks - announce options for offloading taxpayer holdings in Royal Bank of Scotland and Lloyds Banking Group in a strategy update.

It is thought UKFI will stress the need to wait until market conditions allow taxpayer value to be realised before selling the stakes.