One of the City’s most respected financial analysts is setting up his own bank. Sandy Chen at Panmure Gordon, the stockbroker, is looking to raise at least £100m through a stock-market listing.

The new bank, whose name has yet to be finalised, is chaired by Sir Peter Burt, the former Bank of Scotland chief.

The Treasury and Financial Services Authority have already been briefed ahead of a planned launch later this year.

The news comes days after Alistair Darling, the chancellor, renewed his pledge to encourage new competition in British banking.

Chen, 42, who has acted as an informal adviser to the Liberal Democrats throughout the banking crisis, has started sounding out investors about the new venture.

Panmure Gordon is already behind the project, acting as an adviser. The new bank plans to raise deposits from affluent individuals looking for better interest rates than those available on the high street. It would then use these funds to lend money to medium-sized businesses that have been struggling to access cash during the credit crunch.

Chen has approached Royal Bank of Scotland with informal offers to buy its smaller private banks, including Drummonds, Child & Co and Adam & Co. However, Stephen Hester, the RBS chief executive, has said they are not for sale, according to banking sources.

It is understood the two sides have held discussions on other potential deals. RBS is expected to come under pressure from the European Commission to sell parts of its branch network in response to concern over state aid. Chen’s new bank is believed to be interested in picking up small parcels of branches that may come up for sale.

The new bank was originally to be named The Bank of Britain, according to sources. However, officials at the Bank of England are said to have vetoed the use of the name for fear it would lead to confusion internationally or mislead consumers into thinking it was a state-backed institution.

Chen is not the only financier attempting to launch a new retail bank.

Sir Richard Branson’s Virgin Money is also working on plans to get a full banking licence, although the project is thought to be some months away from completion. Sir Brian Pitman, the former chief executive of Lloyds TSB, has been working on the project.

Vernon Hill, the American banking entrepreneur, has also been attempting to raise capital for a new venture called Metro Bank, which has said it would open 200 branches in greater London.

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