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It has emerged that Cowdery plans to use Bradford & Bingley to consolidate the UK’s smaller banks and lenders, in a deal that would usurp private equity group Texas Pacific Group (TPG) as lead investor in troubled bank.

Under the plan, Bradford & Bingley would become the foundation bank for a group that would acquire more lenders. Cowdery claims the consolidation plans would require £2bn capital investment over two years.

It is understood that Cowdery has linked with four of Bradford & Bingley's largest investors – Standard Life, Legal & General, Prudential and Insight – in order to force the lender to end its plan to sell a 23 per cent stake in the business to TPG and its £258m rights issue.

However, Bradford & Bingley's board said last night (24 June) that they would not recommend the deal to shareholders in the "current form of the proposal".