Comment: Mutual appreciation may benefit Nationwide

ROYAL Bank of Scotland’s scenic route to selling 316 branches at the behest of Brussels has sometimes resembled a provincial production of Waiting for Godot with the bar shut during the intermission. Spanish-owned Santander UK may have thought it already knew the meaning of mañana, but its education was incomplete before the tortuous, eventually aborted, negotiations with RBS.

However, now mutually-owned Nationwide has confirmed speculation that it is interested in the branches whose sale has been ordered by the European Union in return for RBS’s taxpayer rescue.

Nationwide boss Graham Beale obviously doesn’t want to create a hostage to fortune, though. He has said there must have been “enormous complexities” in technically separating the branches and systems from the RBS parent.

Translation: the technical challenges associated with prising away the branches into a new business is not going to be solved by a simple reboot of the RBS computer. We are talking the full upgrade.

Nationwide may have been emboldened in its qualified interest in the assets by the success of other mutual Co-operative Group which picked up 632 Lloyds Banking Group branches.

That was also a saga, and also involved significant technical challenges. But the Co-op eventually managed to pull it off, doubling its banking footprint.

Nationwide reckons it has the funding as well as the will to do a deal if it wants. It would probably also have the backing of Chancellor George Osborne and the Treasury.

Mutuals have become fragrant again in Whitehall due to the sins of their stock market banking cousins in the financial crisis.

That probably also explains why the government would welcome Nationwide’s confirmation yesterday that one of the main reasons it would like the RBS branches is to speed up its entry into the small and medium-sized business lending market.

A bit more opaque is the apparent interest of private equity in the renewed auction for the outlets. Several leading houses are believed to have contacted the Scottish bank.

One problem is that they would probably face some flak. In some political quarters private equity, along with hedge funds, are still regarded as little better than asset-stripping vultures. It could be a hard sell to the public as well.

For every zig, there’s an equal and opposite zag

The good news is that the third‑quarter rebound in economic activity was no fluke. The bad news is that it almost certainly will be followed by returning stagnation or contraction in Q4. October through December will not benefit from the additional working day in Q3, and the positive one-off in the last quarter of boosted consumer spending through Olympic ticket sales.

Yesterday’s confirmation that the economy grew 1 per cent in Q3 fails to dispel pessimism prompted by dull manufacturing data, depressed exports to the eurozone, construction on the ropes, and consumers who, if recent years are any guide, will put off festive spending until a day or two before Christmas. Or even wait until the New Year sales.

The final quarter of 2012 is unlikely to disprove Bank of England governor Sir Mervyn King’s assertion that the recovery will be zig-zag. Q3 was zig. Q4 is likely to be zag.