A TAKEOVER vehicle run by former Northern Rock boss Gary Hoffman has suspended its shares in a further sign that it is moving in on a deal which could see it form one of the UK's largest high street lenders.

NBNK Investments, which was co-founded by Lord Levene, chairman of insurer Lloyd’s of London, is reportedly looking to buy the Clydesdale and Yorkshire banks ahead of a bid for 632 branches being sold by Lloyds Banking Group.

NBNK, which is in talks with the lenders’ owner National Australia Bank, would create a new bank with 971 branches and in excess of £40bn in deposits if it is successful. Lloyds is in the process of assessing bidders for its branches, which it must sell as part of a European Commission-enforced deal, ahead of a September 30 deadline for second-round bids.

NBNK's decision to suspend its shares shows discussions have reached a formal stage and will ensure any further speculation over its plans does not trigger sharp price movements.

The deal could reportedly cost NBNK more than half of the £8bn in backing it has received from institutional investors.

NBNK said there was no certainty a transaction will be made and further announcements will be made in due course.

NBNK combined with Yorkshire and Clydesdale banks would be more attractive to Lloyds as a bidder because it would already have access to an operational banking platform.