RBS calls Virgin for deal rescue
VIRGIN Money and two other institutions are in the running to take 316 branches from RBS, it emerged yesterday, two days after the planned sale to Santander collapsed.
The sale was forced on RBS by the European Commission as part of the approval of its 2008 bailout, and must be completed by the end of next year if the state-backed bank is to avoid a fine.
After more than two years of negotiation RBS hoped to complete the £1.65bn sale, covering 1.8m retail customers, to Santander early next year, and is now unexpectedly seeking a new buyer. RBS has approached Virgin Money, which bought Northern Rock, to take over the sale. It is thought to be interested in expanding further, but has not yet decided whether or not it wants the branches on offer from RBS.
RBS is also known to have been approached by two interested parties, reported to include US private equity firm JC Flowers. The other may be NBNK, a vehicle set up with the hope of launching a new retail bank, but which planned to wind down after failing to buy Northern Rock or 632 Lloyds branches that are going to the Co-operative. NBNK was unavailable for comment. Barclays, Lloyds and HSBC are all forbidden from buying the branches on competition grounds.
The Co-op Bank is growing, but as it already faces the challenges of taking on Lloyds’ divestment it is not thought to be interested in the RBS sale.
Meanwhile Andrea Leadsom, an MP on the influential Treasury Select Committee, called for the branches to be launched as an independent bank.
“This is a disaster for the reform of banking that we are trying to implement,” she told City A.M. “I would like to see a new challenger bank created out of the RBS sell down of branches – British taxpayers could be given shares in a new entity.”
RBS could also lobby the EU to extend or scrap the deadline. But the bank insists it will seek a new buyer as its first priority.