Former Lloyds TSB second-in-command Mike Fairey has been hired to lead one of the bids for Royal Bank of Scotland’s upcoming branch sale as competition for its 316 outlets hots up.
Fairey will lead a bid being made by AnaCap and Blackstone, whose plan involves taking a stake in the “Project Rainbow” business before eventually floating the rest in order to allow RBS to sell out fully.
It comes as another of the three shortlisted bidders, W&G Investments, prepares to raise £15 million with an Alternative Investment Market flotation this week to fund its bid. W&G, led by former Tesco Bank chairman Andy Higginson, will use the relatively modest total to fund its bidding expenses.
The shares will be suspended as soon as they float on Wednesday, but if the group is successful the listing will then be used to raise enough cash to complete the deal. Reports suggest that W&G would pay about £1.1 billion up front, plus a further £400m paid out of the business’ profits later on.
The third suitor still in the running is led by American investment houses Corsair and Centrepoint, with backing from Standard Life.
It is seeking a 60 per cent stake in the new bank, which would be floated.
All the bidders are thought to have submitted their final offers, and RBS could make a decision this month. The bank is also still considering the possibility of floating the branches off as an independent business, without a partner.
RBS and Lloyds are being forced to sell branches, along with accounts and mortgages, as a condition of the bail-outs they received from the taxpayer.
Lloyds has already opted for a straight flotation of its 632 branch “Project Verde” divestment after a deal to sell the business to the Co-op collapsed.
Fairey led one of the unsuccessful bids for Verde, on behalf of financier Hugh Osmond.
RBS’s Rainbow business, though smaller, will have around two million retail customers as well as 5 per cent of the market for small and medium-sized businesses.