RBS rivals poised to bid for branches

Published on Saturday 3 April 2010 14:49

CLYDESDALE Bank owner National Australia Bank, Santander and Virgin Money are all to submit bids for the 300-plus bank branches Royal Bank of Scotland is being forced to sell.

• At least three competitors will submit offers for the 318 outlets the bank is being forced to sell

Scotland on Sunday has learned that the three have decided the sale of RBS's former Williams & Glyn's outlets in England and Wales and its NatWest branches in Scotland is what one source called "too good an opportunity to miss".

Analysts believe the bids will come in about 1.5 billion to 2bn, although one recent broker's report suggested a figure of up to 6bn. However, a source close to the talks said: "That 6bn figure looks way too toppy."

Spanish banking group BBVA is believed to be poised to enter the auction for the Williams & Glyn's branches in a bid to break into the British retail and small business banking market. Sweden's Handelsbanken and the French bank Credit Agricole are also believed to have expressed interest. The deadline for bids is Tuesday.

The European Commission ordered RBS to sell the branches, which were rebranded in 1985, in return for the state aid it received.

One analyst commented: "It is a very good retail and business banking franchise that has come up for grabs. That does not happen very often. It would be all but impossible to grow that sort of scale this quickly organically."

RBS is selling 318 branches, of which 312 are in the south and north west of England. There are six NatWest branches in Scotland.

The business employs 6,000 staff. With 1.8 million retail customers, it has a 2 per cent share of high street banking while 230,000 small firms give it 5 per cent of that market. It has 5 per cent of the corporate banking sector.

NAB has been linked with a possible bid for the RBS branches since before Christmas when chief executive Cameron Clyne told a shareholder meeting in Australia that NAB had been approached by "a number of players in the UK market".

Clyne said the approaches indicated that "in our Clydesdale and Yorkshire bank, we have a high quality asset that is an attractive platform for participation in UK market developments".

The attraction for NAB is that it would give it a much greater UK footprint, almost doubling its current stock of 340 branches. A bid by the Australians is also seen as a gesture of faith by the parent in the management team of NAB Europe.

There has been intermittent speculation that NAB might pull out of the UK despite the steady profitability of its operations here in recent years.

It is believed both NAB and Sir Richard Branson's Virgin Money have not ruled out taking private equity partners as part of their bid approaches to RBS. However, it is thought Santander, which has already taken over Abbey, Alliance & Leicester and Bradford & Bingley's branch and deposit business in the UK, is more likely to go it alone on any bid.

• Knives out as RBS rivals carve up branches