Virgin locked in negotiations as it weighs bid for 320 RBS branches

Published on Monday 22 March 2010 20:05

VIRGIN Money is locked in talks with a number of financial backers as it seeks to put together a consortium to bid for 320 Royal Bank of Scotland branches ahead of a 6 April deadline.

City sources said the financial arm of Sir Richard Branson's Virgin Group was holding frenzied negotiations with a range of potential backers, including private equity groups, sovereign wealth funds and financial institutions, in order to meet the deadline.

One report suggested yesterday that Blackstone, the private equity group, and several Abu Dhabi-based sovereign wealth funds had agreed to bankroll the bid. However, sources close to Virgin insisted negotiations with potential consortium members were still ongoing.

Virgin has made no secret of its desire to compete in the UK banking market after it acquired the little-known Church House Trust for 50 million earlier this year.

Although that acquisition has given it access to a banking licence, the firm is now chasing a far more extensive branch network. The 320 RBS branches being sold south of the Border have been valued at 2 billion.

A Virgin source said: "We are looking at this business (RBS] and are talking to a number of different financial backers. Virgin Money on its own would not be able to bid for these assets.

"We'd have to make a consortium bid, as we did for Northern Rock (before it was nationalised]"

Virgin, which is being advised by Greenhill and Quayle Munro, is expected to face competition from Clydesdale Bank owner National Australia Bank and Spanish bank BBVA for the branch network, which RBS has to sell in order to meet European competition rules.