Not since the Knutsford Four has there been so much excitement over a cash shell. Clive Cowdery's plans for a £1 billion listed vehicle to snap up, reshape, hammer together, pull apart and sell on financial services assets is bold, has the blessing of the City and, if nothing else, is certain to inspire dozens of bid rumours. To judge by the noises already coming from the Resolution camp, the deals could be large, plentiful and imminent.

Of course, the Knutsford saga is a lesson in how big words, well-known financiers and hefty dollops of speculation don't necessarily translate into anything concrete. The foursome, led by Archie Norman, of Asda fame, sank £5 million of their own money into piddling Knutsford, only to see it balloon to a market value of £1 billion on ill-founded hopes that it would bid for a blue-chip such as Marks & Spencer or J Sainsbury.

But Knutsford was in a very different world. The venture was launched at the top of the bubble in 1999. Resolution's plan is being hatched at a low point for the banking sector. Knutsford's share price was ludicrously puffed up by inexperienced small punters; Resolution plans to tap sober institutional investors only.

Mr Cowdery enjoys the invaluable benefit of a strong and convincing track record. The institutions that backed his earlier venture vacuuming up closed life funds made an internal rate of return of 28 per cent a year. They included Prudential, Legal & General, Standard Life and the super-rich clients of Fleming Family & Partners. They may well be tempted to return for second helpings.

Resolution's focus this time is broader. It is looking at opportunities in banking, fund management and general insurance, as well as its familiar stamping ground of life assurance. This is highly regulated territory. By hiring John Tiner, the former Financial Services Authority boss, Resolution will have a flying start. It does, however, raise the intriguing possibility of hostile bids for companies being led by the man who only 14 months ago was responsible for regulating them and who knows their darkest secrets.

Mr Tiner has served his six months of purdah and is perfectly entitled to turn poacher in the forest he used to patrol. But, if any of Resolution's takeovers do turn nasty, there may be cries of foul.

There is a long way to go yet. Raising the initial £1 billion in these markets is a big ask. Mergers and break-ups don't automatically create value. Financial services have not traditionally provided the private equity-style returns that Mr Cowdery is promising.

But the lurking presence of an activist group with £5 billion of firepower will certainly help to keep the sector on its toes.

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