Supermarket giant Tesco, which is already flexing its muscles in the shelled-out banking sector by opening bank branches in some of its stores, is emerging as the favourite to buy Northern Rock. The run on the Rock triggered the UK banking crisis and it had to be bailed out with £25bn of Government money and nationalisation. Now around half of this has been paid back as the Rock has run down its mortgage book and the Government is desperate to offload the rest of the business before the election to show that the long-suffering taxpayer will get some money back by returning nationalised banks to the private sector. But the mighty Tesco is a miserly negotiator so don't count your chickens yet. Meanwhile the EU is saying that Lloyds Banking Group, 43 per cent owned by the taxpayer, must sell off some of its nbank branch networks to comply with competition regulations. This means either Halifax or Bank of Scotland. Given that the government-inspired purchase of Halifax has cost Lloyds shareholders billions, with further chunky write-offs to come no doubt, the last thing the bank will want to do is flog Halifax before it's made some serious money out of it. Bank of Scotland, on the other hand is thoroughly unloved as its wild corporate lending under former investment boss Peter Cumming, is actually the source of the aforementioned write-offs, not Halifax's mortgage book as some have supposed. But who'll pay good money for Bank of Scotland?