DCSIMG

State-backed bank idea for RBS branches

Picture: Getty

Picture: Getty

  • by GARETH MACKIE
 

The UK government is eyeing possible plans to turn 316 branches owned by Royal Bank of Scotland into a state-backed business lender.

The move is seen as an option if no buyer can be found for the estate, which RBS is being forced to sell in return for receiving state aid during the financial crisis four years ago.

Santander UK had agreed to buy the branches, which have 1.8 million retail customers and 240,000 small business accounts, but the Spanish-owned bank pulled out of the £1.65 billion deal last month after lengthy talks.

Virgin Money, which earlier this year bought taxpayer-owned Northern Rock, was initially seen as an alternative bidder but Sir Richard Branson recently said his Edinburgh-based group was unlikely to come to the rescue.

RBS is said to be planning to issue a memorandum outlining the terms of its latest sale attempt this week. If a sale cannot be agreed and a stock market flotation attracts insufficient interest, the business could be demerged to RBS’s existing shareholders.

As RBS is still 82 per cent owned by the taxpayer, the government could offer shares in RBS in exchange for the remaining 18 per cent of the new bank to create a state-owned lender.

Westminster’s public accounts committee warned last week that more than £66bn of taxpayers’ cash that was invested in RBS and Lloyds Banking Group to save them from collapse may never be recovered.

RBS declined to comment yesterday.

 

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