A CONSORTIUM backed by the Church of England is mulling a cash bid for more than 300 Royal Bank of Scotland branches if the lender decides not to float the assets on the stock market.
Centerbridge and Corsair, the private equity firms that are leading the consortium, still believe more value could be released through a flotation, with the group taking a substantial stake in the business.
The consortium and its advisers have let RBS know that there is no lack of financial firepower holding it back from making a cash offer, such as that already tabled by Aim-quoted rival W&G Investments.
W&G is chaired by former Tesco finance director Andrew Higginson, who has said repeatedly that – of the three offers currently being looked at by RBS – his group’s bid is the only one that will involve buying the whole business.
W&G has promised to pay £1.1 billion upfront, and a further £400 million based on the acquired branches meeting performance-related targets.
The third bidder, a consortium led by private equity groups AnaCap and Blackstone, has also put in a bid structured like the current one from Corsair, whereby its consortium would take a substantial stake and assume management control of the divested assets.
None of the suitors was prepared to comment yesterday. But regarding the possibility of the Church of England-backed offer having a “backstop position” of an alternative full bid for the branches, one banker close to the process said: “It would not surprise me if quite a lot of people would be happy to buy at less than book value and deny RBS any upside as per the Higginson bid.”
One banking analyst said: “It could be that Corsair and Centerbridge may have been a bit nettled about Higginson banging on about being the only full bid on the table, and want to give themselves the option of making a substantial change to the structure of their offer even at this late stage.
“But, given all the offers are in, and RBS is expected to choose a preferred bidder for exclusive negotiations in the next fortnight or so, it looks a bit late in the day.
“I would say it is more likely that they are saying, we could afford to do this, but we still believe the partnership route is the way to go to extract most value.”
The other backers of Corsair and Centerbridge include Edinburgh-based asset manager Standard Life, and an investment group, RIT Capital, led by City of London doyen Lord Rothschild.
RBS also declined to comment yesterday. The bank has been ordered to sell the branches and the Williams & Glyn brand by the European Commission by the end of this year in return for the lender’s £45bn taxpayer bailout at the height of the financial crash that left the state with an 81 per cent stake.
It is thought likely that Brussels will extend that date, but with what most analysts believe is the less likely possibility of a fine for missing the deadline.
RBS has kept open the option of rejecting all three offers for and floating the branches off on the market by itself.
News of Centerbridge and Corsair’s possible cash offer comes as the Co-operative Bank is this week expected to post £500m-worth of writedowns as it prepares for its own flotation.