Northern Rock chairman Ron Sandler has become the latest person to be linked with the chairmanship of Lloyds Banking Group as reports suggest that controversial accounting rules could mean Lloyds posts a profit for the first six months of 2009.

NORTHERN Rock chairman Ron Sandler has become the latest person to be linked with the chairmanship of Lloyds Banking Group as reports suggest that controversial accounting rules could mean Lloyds posts a profit for the first six months of 2009.

Also thought to be in the running are Sir Vin Bischoff, former chairman of Citigroup, and Chris Gibson-Smith, chairman of the London Stock Exchange.

Sandler, chief operating officer of NatWest until it was taken over by Royal Bank of Scotland in 2000, took on the chairmanship of Northern Rock after the troubled mortgage lender was nationalised in February 2008.

He initially had an executive role as he put together a turnaround plan for the bank but stepped back to non-executive chairman in October.

It emerged in May that Sir Victor Blank is standing down from the Lloyds board after sustained investor criticism over its takeover of Edinburgh-based HBOS, a deal which was completed in January after an agreement between Blank and Prime Minister Gordon Brown that competition rules would be waived.

The Government, through UK Financial Investments, will have a major say in the successor as a 43.4% shareholder in the bank.

UKFI, which manages the taxpayers' stakes in Lloyds and RBS, last week denied it had asked veteran banker Bischoff to take over as chairman, adding that the search for the right candidate was continuing.

It is understood, however, that UKFI is keen for existing Lloyds chief executive Eric Daniels to remain in post to continue the integration of the two banks.

So far 8000 jobs, around 800 of them in Scotland, have been shed by the combined institution.

Bischoff is a controversial candidate due to his role as a director of Citigroup, one of the US banks hardest hit by the credit crunch.

To complicate matters further, Bischoff is also thought to be a candidate for the chairmanship of UKFI, a post currently occupied by Glen Moreno, chairman of publisher Pearson.

UKFI is expected to take on stewardship of Northern Rock and the mortgage book of Bradford & Bingley later this year.

Meanwhile, a weekend report suggested that Lloyds could post a profit for the first half of its financial year.

The company revealed a £10.1bn loss for 2008 after taking billions of pounds of writedowns on loans and investments.

It is thought that under fair value accounting, some of the hardest hit investments may have regained some of their value in recent months.

The bank is also tipped to have made operating profits of £7bn. The combined factors could outweigh rising bad debts from mortgages and corporate loans.