RETURNING Northern Rock to private ownership may not necessarily generate massive windfalls for investors, a local stockbroker has claimed.

The Government is looking to recoup the £1.4bn it spent bailing out the Newcastle-based bank following its collapse in the credit crisis.

Potential buyers include Sir Richard Branson’s Virgin Money and US private equity firm JC Flowers, which are both understood to have tabled first round bids.

This week the Rock’s Government-appointed chairman, Ron Sandler, claimed the company could bounce back into the black next year after posting a £78.8m loss for the half-year to June.

But his bullish words will not necessarily spark a large-scale bidding war for the firm, according to Stokesley stockbroker Andrew Priestley.

Mr Priestley, of Redmayne-Bentley, said: “I don’t see there being a flock of investors buying into Northern Rock at the moment.

“It’s still in recovery mode.

“It’s off life support and learning how to get going again - but it’s clearly not going to do the marathon.”

He said the Rock would emerge as a “cleaner, streamlined, more utilitarian” banking operation that could eventually return a profit to taxpayers.

The value of its assets are thought to be around £1bn - about £400m shy of the £1.4bn it cost the taxpayer to bail it out.

But any loss on the sale could be offset by a profit earned on the £40bn of Rock mortgages that are being kept on the public sector balance sheet.

The company was the first high profile UK casualty of the financial crash which brought the global banking system to a virtual standstill in 2007 and 2008.

Lloyds and Royal Bank of Scotland also received multi-million pound bail-outs from the taxpayer as they struggled to survive.

Lloyds, which is 41% owned by the Government, highlighted a difficult start to the year this morning when it posted a £3.3bn loss in the six months to June.

The poor performance was attributed to the £3.2bn the bank had set aside to compensate customers who had been mis-sold payment protection insurance.

The bank also confirmed it had received “a number of credible initial approaches” for the 632 branches it is being forced to sell by EU regulators. It hopes to have a buyer by the end of the year.

BETWEEN THE ROCK AND A HARD PLACE: Andrew Priestley of Redmayne-Bentley and (inset) Northern Rock chairman, Ron Sandler,